Angola quits OPEC in oil producer group defeat Reuters

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© Reuters. FILE PHOTO: The Organization of the Petroleum Exporting Countries (OPEC) logo is seen outside the OPEC headquarters in Vienna, Austria April 9, 2020. REUTERS/Leonhard Foeger/File Photo

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By Miguel Gomes, Ahmad Ghaddar and Alex Lawler

LUANDA/LONDON (Reuters) – Angola said on Thursday it would leave OPEC in a blow to the Saudi-led oil producer group, which has sought support in recent months for further output cuts to prop up oil prices.

Angola’s oil minister, Diamantino Azevedo, said the Organization of the Petroleum Exporting Countries no longer serves the country’s interests. It joins other medium-sized producers Ecuador and Qatar that have left OPEC in the past decade.

“We feel that … Angola currently has nothing to gain by remaining in the organization and has decided to leave to defend its interests,” Azevedo said in a presidential statement.

International oil prices fell as much as 2.4% on Thursday as analysts said the exit raised questions about the unity of OPEC and OPEC+, the broader group that includes Russia and other OPEC allies. OPEC+ has been implementing a new round of oil production cuts since January to try to bolster the market.

“Prices fell on concerns about OPEC+ unity as a group, but there are no signs that more heavyweights within the alliance are going to follow Angola’s path,” UBS analyst Giovanni Staunovo said.

Angola’s announced withdrawal follows Angola’s protest against OPEC+’s decision to cut its production quota for 2024. The dispute helped delay OPEC+’s last policy meeting in November and its agreement on new production cuts.

“This shows that there is no consensus within OPEC itself, and this has been going on for some time,” said Ali Al-Riyami, former director general of marketing at Oman’s energy ministry.

“There will undoubtedly be consequences, but I don’t think other (countries) will follow.”

Nigeria is another African member of OPEC struggling to increase production and struggling to meet its quota. At the November meeting, it received a higher OPEC+ target for 2024, albeit lower than it had sought, limiting its ability to raise production if it were able to.

OPEC did not respond to a request for comment.

DECLINING MARKET SHARE

Three OPEC delegates, who spoke on condition of anonymity, said Angola’s decision to leave came as a surprise because they had expected the dispute over Angola’s quota to overwhelm them.

Angola, which joined OPEC in 2007, produces about 1.1 million barrels of oil a day, compared with 28 million barrels a day for the group as a whole.

Angola’s departure will leave OPEC with 12 members and production of about 27 million barrels per day, about 27% of the world’s 102 million bpd oil market.

This further reduces OPEC’s share of the world market, which was 34% in 2010.

As well as the departure of some members, decisions by OPEC and OPEC+ to cut production and rising production by non-OPEC countries, including the United States, have reduced its market share.

Brazil is expected to join OPEC+ in January but will not participate in the group’s coordinated output limits.

Angola has not been able to produce enough oil to meet its OPEC+ quota in recent years due to falling investment and a lack of new major oil fields.

It has been trying to reverse declining output since a peak of 2 million barrels a day in 2008 and expects to maintain current output until 2024, a senior government official said in October.

For Angola, oil and gas account for around 90% of total exports, an over-reliance that the government is trying to reduce after the COVID-19 pandemic and lower global fuel prices hit the country’s economy hard. Several oil companies and independent companies operate in the South African state, including TotalEnergies (EPA:), Chevron (NYSE: ), ExxonMobil (NYSE: ) and Azule Energy, a 50/50 venture between Eni and BP (NYSE: ).