Angola quits Opec after clashes with Saudi Arabia

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Angola, Africa’s second biggest oil producer, has said it is leaving Opec after disagreements over its production targets, delivering a blow to the oil cartel chaired by Saudi Arabia.

The decision comes after the producer group lowered Angola’s oil output target last month as part of a series of cuts led by Saudi Arabia to help prop up prices.

Brent, the international crude oil benchmark, fell 1.8 per cent to $78.26 a barrel on Thursday while the US benchmark, West Texas Intermediate, dropped 2.1 per cent to $72.69 a barrel.

Angola joined Opec in 2007 but has clashed with Saudi Arabia at recent meetings over attempts to lower its production baseline — the level from which each member’s output quota is calculated — to reflect declines in the country’s production capacity.

Angola walked out of an Opec meeting in June, but eventually agreed — along with Nigeria and the Republic of Congo — for its production baseline to be reviewed by an independent third party. Following that review, all three countries’ baselines for 2024 were lowered at the last Opec meeting in November.

Helima Croft, a former CIA analyst and head of commodities research at RBC Capital Markets, said Angola had never seemingly come to terms with the June agreement, which allowed fellow Opec member the United Arab Emirates to increase its baseline for 2024 while its own was cut.

“The seeds of this exit were laid in June,” she said. “In addition, Angola has been one of the moodier members, having staged multiple meeting walkouts in recent years at the secretariat.”

The departure is a blow to Opec but will not have a significant impact on the group’s ability to influence the market. Angola’s 1.2mn barrels a day of production represents about 2 per cent of the total output of the Opec+ alliance, which also includes Russia.

“Given the size of the country’s output, this exit will not materially impact group operations,” Croft said.

Bjarne Schieldrop, chief commodities analyst at SEB, cautioned against seeing Angola’s departure as a sign of a bigger problem with the group.

“It will always be used by those who are bearish on oil as an excuse to sell oil,” he said. “What really matters is Russia and Saudi Arabia. This is not a signal that the rest of Opec is falling apart.”

Angola has been battling to turn around declining production for nearly a decade. The decision, announced by oil minister Diamantino de Azevedo was taken at a cabinet meeting and approved by President João Lourenço, the state media agency reported on Thursday.

Alex Vines, head of the Africa programme at the Chatham House think-tank, said Angola had pursued an increasingly “à la carte foreign policy” under Lourenço, who became president in 2017, “and leaving Opec is part of that”.

Although the country has historic links with the Soviet Union, it has been more prepared to criticise Russia’s invasion of Ukraine than other African countries. Luanda had become disgruntled with the direction taken by Opec, usually set by Saudi Arabia and Russia, and the lack of attention paid to the views of smaller producers such as itself, analysts said.

Ricardo Soares de Oliveira, an Oxford university professor of African politics, said Angola had grown closer to the US under Lourenço, though he did not see how leaving Opec would automatically serve Washington’s interests.

President Joe Biden played host to Lourenço last month and the US has committed to investing more than $1bn in the country, including $900mn in a solar project aimed at helping accelerate its diversification away from oil.

“There’s a very clear rapprochement between the US and Angola. But you can be a pro-west, global south player and still stay in Opec,” Oliveira said.

“Going all the way in a pro-western direction would be quite atypical for African states that are threading the needle carefully, unless they’ve struck some grand bargain with the Americans.”