In a significant development, Angola has chosen to withdraw from the Organization of the Petroleum Exporting Countries (OPEC), dealing a setback to the Saudi-led oil producer consortium. This decision stems from a disagreement over output quotas, with Angola contending that OPEC no longer serves its best interests.
The departure of Angola follows the footsteps of Ecuador and Qatar, former members who opted out for similar reasons. This move adds another layer of challenge for OPEC, which has been grappling with diminishing market share due to production cuts and the escalating output from non-OPEC nations.
Table of Contents
Background on OPEC
Established in 1960 during the Baghdad Conference by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, OPEC is an intergovernmental organization. Key members include Algeria, Equatorial Guinea, Gabon, Libya, Nigeria, the Republic of the Congo, and the United Arab Emirates.
The primary objective of OPEC is to coordinate and unify petroleum policies among member countries. This coordination aims to ensure fair and stable prices for petroleum producers while maintaining an efficient, economic, and regular supply of petroleum to consuming nations.
Headquartered in Vienna, Austria, OPEC holds substantial global influence, possessing over 80% of the world’s total crude oil reserves. OPEC+, comprising OPEC and 10 other major oil-exporting nations, including Russia, represents approximately 40% of world oil production. The organization regulates crude oil prices through mechanisms such as spot or future sales, using benchmarks like Brent Crude and WTI (West Texas Intermediate).
OPEC’s Mandate and Membership
OPEC’s mandate involves managing oil supply, setting global oil prices, and preventing fluctuations that might adversely impact the economies of both producing and purchasing countries.
Membership is open to any country that is a substantial oil exporter and aligns with the organization’s ideals. Additionally, non-OPEC countries exporting crude oil are referred to as OPEC-plus countries, including Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan, and Sudan.
Angola: A West-Central African Player
Situated on the west-central coast of Southern Africa, Angola shares borders with Namibia, the Democratic Republic of the Congo, Zambia, and the Atlantic Ocean to the west. Luanda, the capital, is the largest city in Angola. The country’s decision to exit OPEC reflects its evolving priorities and the need to align its oil policies with its economic interests.
India’s Stakes in the Global Oil Landscape
India, as the world’s third-largest consumer of crude oil, plays a crucial role in the global oil landscape. With a daily consumption of 5.35 million barrels, India ranks behind the United States and China. Notably, nearly 85% of India’s total crude oil consumption is met through imports, as the country’s domestic production has consistently remained below 700,000 barrels per day.
As the world’s third-largest oil importer, India traditionally relied on oil imports from the Middle East, Iraq, and Saudi Arabia. However, the recent trend of increased reliance on Russian oil underscores the diversification of India’s oil supply sources.
Russia’s oil imports to India have witnessed a significant uptick, particularly in November 2022, when Russian oil accounted for approximately 23% of India’s total oil imports. This shift in the oil trade landscape reflects the changing dynamics of global partnerships and the influence of geopolitical factors.
In conclusion, Angola’s decision to exit OPEC underscores the complexities and challenges faced by the organization in retaining its members. As OPEC navigates evolving dynamics in the global oil market, the departure of key members like Angola poses questions about the efficacy of the organization’s policies and its ability to adapt to the changing energy landscape.