1704201365
The Russian newspaper “Izvestia” published a report in which it spoke of the possibility that the Organization of the Petroleum Exporting Countries (OPEC) could lose some weight this year against the background of Angola, one of the leading African countries in oil production, and expressed his desire to withdraw from the cartel.
The newspaper said in its report translated by Arabi 21 that Angola is considered the first country to withdraw from OPEC in the last four years, although such cases have occurred frequently in the past. These efforts come amid a significant decline in OPEC’s overall share of global black gold production. In an interview on national television, Angola’s Minister of Mineral Resources, Diamantino Azevedo, announced his country’s withdrawal from OPEC because his country’s membership in the cartel, which produces about 1.1 million barrels per day, no longer serves its national interests .
What are the reasons for leaving?
Angola defied OPEC Plus’s recent decision to extend production curbs, with the country’s representatives in the organization expressing their desire to produce 1.18 million barrels per day. Although the amount Angola wants to increase is small on a global scale, the country faces significant pressure from Saudi Arabia, which is reducing production and demanding the same from some “small oil producers.”
The newspaper reported that production in Angola has fallen by 700,000 barrels per day since 2016, almost nine times the potential increase that caused the entire conflict. Angola’s proven reserves amount to about 10 billion barrels, which allows production at the current pace for about 30 years – a very large number by the global average. The Angolan leadership blames OPEC for the decline in production because it restricts the national oil industry’s complete freedom of action.
On the other hand, this decision could have political reasons, especially after the Americans promised to send a billion dollars worth of investments to Angola, including $900 million for a solar energy development project, following Angolan President João Lourenço’s visit to his American counterpart Joe Biden last November. .
Given the strained relations between Washington and the main OPEC players, American influence on the Angolan decision can be observed, even if possible aspirations of Luanda are not directly discussed. In any case, Africans, who joined OPEC in 2007, expect some freedom over their resources.
Will OPEC and the OPEC+ alliance suffer losses?
The newspaper reported that the statement caused an immediate 1.5 percent drop in oil prices on world markets. However, other news in the following days helped reverse the decline. From a purely technical point of view, Angola’s withdrawal does not pose a particular problem. The head of the economic department at the Institute of Energy and Finance in Moscow, Marcel Salikhov, explained that Angola supplies only 6 percent of OPEC production and about 4 percent of OPEC Plus production .
According to Salikhov, Angola does not have spare production capacity and therefore cannot influence the world market. Angola’s efforts are merely a reflection of tensions within OPEC and OPEC Plus, so not all countries actually adopt OPEC’s position Kingdom of Saudi Arabia on the need to adhere to limiting tactics. Strict production. Riyadh’s financial resources allow it to maintain low production levels for years, something opposed by cartel members who struggle to manage their own budgets.
The newspaper reported that OPEC’s significant decline in market share in recent months and years is a matter of grave concern for some members of the organization due to efforts by countries outside the cartel, such as the United States, to increase their influence. By the end of 2023, America broke the previous oil production record with an amount of almost 13 million barrels per day, a large part of which goes to foreign markets, eliminating the traditional players that are part of the cartel. These circumstances lead to increased friction between different actors with different interests.
The newspaper quoted Ivan Timonen, an energy expert at the Russian company Vigon Consulting, as saying that OPEC’s position appears to be strong and suggested that total production by OPEC member states at the end of the year was 33.4 million barrels per year day. This corresponds to 33 percent of global hydrocarbon production. The share of the OPEC Plus alliance will be around 40 percent.
According to Timonen, the organization plays a very important role in global trade as it sends a large part of its products to foreign markets. It is still too early to talk about a reduction in the influence of the cartel in shaping price offers, since the limited increase in prices observed last year after the adoption of new decisions by the organization is primarily due to the limited prospects for growth in oil demand on the world market. The measures taken by Saudi Arabia, Kuwait and the United Arab Emirates, which could change production levels, are considered crucial for the fate of OPEC.
In this context, Timonen gave some examples of countries leaving the organization. For example, Gabon left the cartel in 1995 and then decided to return in 2016. In 2019, Qatar also left OPEC, reducing its role in the global oil market and rendering its presence among the organization’s members useless. According to Salikhov, Indonesia, Ecuador and Qatar were among the former OPEC members whose exit did not have a significant impact on the fate of the agreement.
In early December, the head of Brazil’s national oil company Petrobras said his country intended to join the cartel, although there was no talk of setting quotas for Brazil. In the first phase, Brazil will join as an observer, knowing that it is generally increasing production very quickly, as evidenced by the fact that its production has increased by about one and a half times over the last decade, to the current level of 3.6 million barrels per day has increased.
There is no doubt that new major players will, for better or for worse, turn their attention to the cartel, which has shown since 2016 that it is an active player willing to accept certain losses at the moment to achieve long-term goals.
#Angolas #exit #OPEC #affect #oil #market