After 16 years of membership in the Organization of the Petroleum Exporting Countries (OPEC), Angola decided to withdraw. This is seen as the latest sign that the differences within OPEC on production cuts are becoming increasingly difficult to bridge.
According to CCTV News, citing a report by Angolan state news agency on the 21st, Angola's Minister of Mineral Resources, Oil and Gas, Diamantino Azevedo, announced on the same day that Angola would withdraw from OPEC.
Affected by this, international oil prices rapidly extended their intraday decline, but then the decline converged. As of the day**, the NYMERCANX light weight for February 2024 delivery closed at 73 cents per barrel$89, a decrease of 044%;London Brent *** 31 cents for February 2024 delivery closed at 79 per barrel$39, a decrease of 039%。
Previously, after six consecutive days of fermentation, the bullish momentum driven by the Red Sea crisis was weak, coupled with the unexpected increase in U.S. ** inventories, investors' concerns about potential ** disruptions under the pessimistic expectations on the demand side quickly declined. Phil Flynn, senior market analyst at Price** Group, told CBN: "There have been widespread concerns among investors recently that OPEC may face increasing pressure to increase production, and the news of Angola's withdrawal from OPEC has exacerbated such concerns." ”
Internal disagreements. Angola's decision to withdraw from OPEC was reportedly made at a cabinet meeting, which João Lourenço signed on December 21.
We believe that at the moment Angola has nothing to gain by remaining in the organization, and in order to defend its interests, Angola has decided to withdraw. "When we're in an organization and our contributions, our ideas aren't working, the best thing to do is to quit." ”
After Angola's withdrawal, the number of OPEC members will be reduced to 12.
Angola's move is not without a trace. At the ministerial meeting between OPEC and non-OPEC oil producers (OPEC+) in June this year, at the insistence of the UAE, the UAE obtained permission to raise the 2024 production benchmark, while Saudi Arabia asked African oil producers to cut quotas, and there were scenes of early departure of Angola, Gabon and other countries at the meeting. In an attempt to appease the coalition to cut production, Saudi Arabia eventually made a concession and announced a voluntary additional 1 million barrel per day of production cuts to maintain oil market stability, which put internal disagreements on hold for the time being.
By the time of the last OPEC+ meeting this year, the differences between countries such as Angola and Nigeria and Saudi Arabia over their demands on sticking to their own production benchmarks had become increasingly difficult to bridge, leading to the postponement of the meeting scheduled for November 26 to November 30.
According to a statement issued after the meeting, Angola's oil production quota for next year was lowered to 1.11 million barrels per day from 1.28 million barrels per day set at the 35th OPEC+ ministerial meeting in June. Angola said at the time that the decision could weaken its ability to increase production, but it did not plan to withdraw from OPEC+.
The focus is back on the demand outlook.
Angola is one of the smallest OPEC members, producing 1.13 million barrels per day in November.
On the face of it, the practical impact of Angola's withdrawal from OPEC is rather limited. "However, this could be a sign that OPEC may be forced to cede its market share and its ability to control." ”
Recently, international oil prices have stabilized and rebounded. Analysts said that on the one hand, after the continuous decline, the first technical oversold and oil prices entered the low support area of the year, and some funds are willing to take profits;On the other hand, the continuous oil price has played a positive role in urging OPEC+ to implement voluntary production cuts, and in the past few days, Saudi Arabia and Russia have stated that OPEC+ can deepen production cuts if necessaryIn addition, the geopolitical situation in the Red Sea region has also caused disruptions to the market.
But for oil prices to trend**, we need to see an upturn in demand expectations. Given the rapid cooling of economic conditions in the U.S. and Europe as we enter the fourth quarter, the current timing and market conditions are considered to be insufficient to sustain oil prices**.
The focus is back on the global demand outlook, and as long as the Red Sea situation does not spill over into the Strait of Hormuz, the impact on oil** is likely to be limited. "In addition, increased U.S. inventories and record domestic** production have also put pressure on oil prices." ”
According to data released by the U.S. Energy Administration on the 21st, U.S. ** inventories, including strategic reserves, increased by 2.9 million barrels in the week ended December 15. During the same period, ** average daily production reached a record high of 13.3 million barrels per day.
Naohiro Niimura, partner at market risk consultancy in Japan, said: "With OPEC+ not cutting production further this year, oil prices are likely to remain in a low range until the end of the year, with a focus on key economic data and the dollar's reaction to these data." "He's going to trade between $70 and $75 this month.