By Adedapo Adesanya
Oil prices dropped on Thursday after Angola said it would exit the Organization of the Petroleum Exporting Countries (OPEC).
Brent crude futures went down by 31 cents to close at $79.39 a barrel while the US West Texas Intermediate (WTI) crude futures fell by 33 cents to $73.89 a barrel.
Angola’s oil minister, Mr Diamantino Azevedo, said on Thursday that the country’s membership in OPEC was not serving its interests.
In his words, “Our role in the organization was not deemed relevant. It was not a decision made lightly — the time has come.”
The exit raises questions about the producer group’s efforts to support prices by limiting global supplies.
Angola’s exit will shrink OPEC to 12 nations at a time when it’s struggling to shore up prices, which have lost almost 20 per cent in the past three months.
The Saudi Arabia-led producer group in recent months has been rallying support to deepen output cuts and boost oil prices.
The country’s clash with OPEC’s leadership emerged in June, when a deal that awarded a higher production target to the United Arab Emirates (UAE) forced Africa’s second largest oil producer to accept a reduced limit for 2024 that certified its fading abilities.
Angola produces around 1.1 million barrels per day, compared with 28 million barrels per day for the whole group.
Market analysts say since it is one of the smallest producers and its departure may have a limited impact on global supplies.
Several members have quit OPEC in recent years, for different reasons from Indonesia to Qatar and most recently, Ecuador.
Separately, the US Energy Information Administration (EIA) said its crude output rose to a record 13.3 million barrels per day last week, up from the previous all-time high of 13.2 million barrels per day.
Recent attacks carried out in support of Palestinians by Yemeni Houthi militant group on vessels headed towards Israeli ports have forced major maritime carriers to steer clear of the Red Sea, causing global trade disruptions.
About 12 per cent of global trade, including 30 per cent of global container traffic, passes through the Red Sea, meaning that delays there can potentially affect fuel prices as well as the availability of various commodities and electronics.
Many companies have already halted shipping in the Red Sea and at the Suez canal. Four of the world’s five largest container-shipping companies, namely Maersk, Hapag-Lloyd, CMA, CGM and MSC, have paused or suspended their services in the Red Sea, the route through which traffic from the Suez Canal must pass.
