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Angola’s Exit from OPEC Unveils Group Struggles Amidst US Output

Angola's exit from OPEC highlights the group's internal problems, coinciding with its efforts to reduce output in the face of rising US output.

Angola’s departure from OPEC underscores the group’s internal tensions, coinciding with its efforts to curtail output amidst escalating US production, complicating price stabilization endeavors.

Despite sustained oil production cuts and recent reductions in November, OPEC and its allies grapple with persistently low prices. 

Challenges mount as rising US crude production, a global shift from fossil fuels, and internal discord hinder the group’s efforts to buoy prices.

Price Pressures and Ongoing Efforts:

Currently at a six-month low, oil prices struggle to rise above $80 a barrel despite geopolitical disruptions. 

OPEC’s implemented supply cuts, exceeding five million barrels per day since 2022’s end, have not fully reversed the downward price trend, triggering skepticism and attributions of the price drop to speculators by Saudi Arabia.

Disunity and Departures:

Angola’s exit amplifies skepticism about OPEC’s unified strategy, exacerbated by prior dissatisfaction voiced by Nigeria at the November ministerial meeting. Disagreements among the 23-member alliance and the lack of consensus on production cuts have fueled doubts.

While Angola’s departure may not significantly impact OPEC due to its relatively smaller production volume and higher production costs than Middle Eastern nations, it adds to a trend that saw smaller producers like Indonesia, Qatar, and Ecuador leave the group earlier.

OPEC’s Evolution and Current Challenges:

Originally formed in 1960 with 13 members, OPEC expanded in 2016 to include 10 more nations, but the alliance’s enlargement has complicated decision-making. 

Despite historical dominance during oil crises, OPEC’s share of the oil market has declined to 51%, which is attributed to supply cuts and geopolitical issues in countries like Libya and Venezuela.

Global Shifts in Oil Supply:

The International Energy Agency (IEA) noted a shift in global oil supply dynamics, with increased production in the United States, Brazil, and Guyana altering the global oil trade landscape, impacting OPEC’s traditional dominance and market control.

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