Angola will leave oil cartel OPEC, following a dispute over oil production quotas. The nation’s oil output has been sinking in recent years, and OPEC requested it cut its exports to 1.1 million barrels per day, below its current production levels.
“As a country, when we participate, it is to contribute, expecting results that align with our interests,” Mineral Resources Minister Diamantino Azevedo said. “When this doesn’t occur, we become redundant, and it no longer makes sense for us to remain in the organization.”
Angola is the latest member to quit the group in recent years, and its exit raises concerns over OPEC’s infighting and the cartel’s cohesion, Bloomberg reported, as its influence over the global oil trade continues to wane.
Non-OPEC nations are filling production gaps
OPEC seeks to control oil prices by systematically cutting production. But in recent months, that method hasn’t worked. Non-OPEC nations, including the U.S. Brazil, and Guyana, are producing more oil than ever, padding out the gaps left by the oil cartel’s members. Heading into 2024, analysts believe the oil market could actually be oversupplied, especially if U.S. oil production once again exceeds estimates. “There’s a lot of fear that no matter what OPEC does, no matter how much they cut, there are non-OPEC producers that are just going to fill the hole they keep digging,” Rebecca Babin, a senior equity trader with CIBC Private Wealth, told CNBC.
OPEC’s influence on oil prices is falling
Despite the war in the Middle East and shipping pressures in the Red Sea, oil and gas prices have remained stable, suggesting that OPEC “simply is not the force it once was,” Financial Times’ economics commentator Chris Giles noted. He cautions that while the energy crisis is not over, the world is rapidly moving away from fossil fuels, as reflected by the COP28 agreement to phase out oil and gas production. “Peak oil is within sight and there is not much Opec+ can do about it,” Giles wrote.
World is at the ‘beginning of the end’ of fossil fuel era
The International Energy Agency believes that oil demand will peak before 2030 as the world moves toward renewable energy and electric cars. “The transition to clean energy is happening worldwide and it’s unstoppable,” IEA Executive Director Fatih Birol said in October. It’s likely that OPEC will keep a tight grip on the oil market until the end of the decade, but demand is expected to shrink, ultimately impacting the cartel’s influence. That is “because consumers have an increasing range of mature clean energy options that become more attractive,” the IEA said in its annual World Energy Outlook.