NEW YORK: Oil prices fell by roughly $1 a barrel on Thursday after Angola said it would exit the Organization of the Petroleum Exporting Countries (OPEC), raising questions about the producer group’s efforts to support prices by limiting global supplies.
Brent futures fell 94 cents, or 1.18%, to $78.76 a barrel at 12:20 p.m. (1720 GMT) US West Texas Intermediate crude dipped 96 cents, or 1.29%, to $73.26.
Earlier in the session, both benchmarks were down by more than $1 on news that Angola was planning to leave. Angola’s oil minister Diamantino Azevedo said the country’s membership in OPEC was not serving its interests. The Saudi-led producer group in recent months has been rallying support to deepen output cuts and boost oil prices. “It seems like OPEC is losing the battle to keep prices higher,” Smith said, noting that non-OPEC producers like the US have stepped up to fill the supply gap.
Angola produces around 1.1 million barrels per day (bpd), compared with 28 million bpd for the whole group. The country’s exit raises questions about the cohesion and direction of OPEC, even though it is one of the smallest producers and its departure may have a limited impact on global supplies, Smith said.
At a meeting in November, Angola had protested a decision by OPEC to cut its production quota for 2024 to help prop up oil prices. Separately, the US Energy Information Administration (EIA) said US crude output rose to a record 13.3 million barrels per day (bpd) last week, up from the previous all-time high of 13.2 million barrels per day.
“With such a heavy load of US crude reported in increased measure, one can only assume that the market remains edgy in regard to supply diversion or even hiatus caused by the Houthi attacks on shipping,” PVM analyst John Evans said.
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