Angola departure a blow for OPEC+ as cartel tensions rise

FE Team | Published: December 22, 2023 23:44:33

LONDON, Dec 22 (AFP) : Angola's departure from OPEC exposes the tensions with the oil cartel as it seeks to cut output to maintain prices just as the United States ramps up production.
Despite slashing oil production for months on end and announcing new cuts in late November, the Organization of the Petroleum Exporting Countries and its ten allies have struggled to boost flagging prices.
Moreover, the wider OPEC+ group faces pressure on multiple fronts, as rising US crude production, a looming transition away from fossil fuels, and discord within its ranks have added to the challenges.
Prices are sitting at their lowest level in nearly six months despite the cartel's announcement in November to further cut output.
They jumped briefly as cargo shippers and oil firms said they will avoid using the Red Sea and Suez Canal because of drone and missile attacks by Huthi rebels. But they still couldn't break above $80 a barrel.
Nevertheless, crude prices remain above the average of the past five years.
In an effort to prop up prices, the OPEC+ alliance has implemented supply cuts of more than five million barrels per day (bpd) since the end of 2022.
After nearly striking $100 in September, the alliance's strategy has since fallen short of reversing the price slide.
While Saudi Arabia blamed speculators for the drop, rather than the weak demand outlook as the world economy struggles, analysts say the cartel's lack of unity has fuelled scepticism about their latest announced cuts.
The decision by Angola will likely further fuel scepticism.
"If the supply cuts went broadly unheard it is because the latest discussions showed frictions at the heart of the group," Swissquote analyst Ipek Ozkardeskaya told AFP.
Not only Angola, but also Nigeria expressed dissatisfaction with their production quotas at the November ministerial meeting, which had to be postponed for several days because of disagreements.
Furthermore, the OPEC+ alliance was unable to agree on a group-wide production cut that all 23 members would have supported.
Instead, heavyweights Saudi Arabia and Russia only managed to garner support from six other members in a bid to voluntarily reduce output.