By Anthony Harrup


Angola's decision to leave the Organization of Petroleum Exporting Countries after 16 years over disagreement with its production quota is likely to put downward pressure on oil prices as it could encourage other members not to stick to their targets, analysts say.

Angola, one of OPEC's biggest African producers with output of 1.13 million barrels a day in November according to OPEC's latest report, said Thursday that it plans to leave the group, official news agency Angop reported.

The decision, taken at a cabinet meeting and announced by Angolan Oil Minister Diamantino de Azevedo, came after the oil cartel reduced the country's oil output target to 1.11 million barrels per day as part of a series of cuts set out at its latest ministerial meeting.

Several African producers including Angola were opposed to target reductions, which led the cartel to postpone its meeting for four days in late November. Angola and Nigeria weren't among members offering additional voluntary cuts.

Saudi Arabia, the United Arab Emirates and OPEC+ member Russia are taking more of a price-over-volume line, "and that really is difficult for some of the smaller nations to swallow given their cash situations compared with the kingdom," said Gary Cunningham, director of market research at Tradition Energy.

"It's not a huge shock. We thought they would have stormed out of the meeting a few weeks ago, but I think it's more about the fact they can't just stay in it and be controlled by production targets," he added.

OPEC wasn't immediately available for comment when contacted by Dow Jones Newswires.

After the Nov. 30 meeting, which was moved online instead of being held as originally planned at the cartel's headquarters in Vienna, OPEC said that Saudi Arabia and Russia would extend their voluntary additional output cuts of 1.3 million barrels a day through March, and that others would contribute around 900,000 barrels a day in voluntary reductions for a total reduction of about 2.2 million barrels a day.

Oil prices continued to fall in the following weeks, however, as doubts about commitment to those cuts stoked concerns about eventual oversupply in the market. U.S. production, which last week rose to a record 13.3 million barrels a day, has added to concerns about oil surpluses.

"It does show that members are beginning to be more uneasy, and we could see further fallout," said Dennis Kissler, senior vice president at BOK Financial. "It's a negative factor to prices as more supply is likely and members overproduce."

Oil futures, which have risen this week on concerns about shipping delays in the Red Sea as a result of Houthi rebel attacks on vessels, fell Thursday on news of Angola's decision. WTI for February delivery was recently down 0.7% at $73.68 a barrel, above an earlier low of $72.44. Brent for February was down 0.6% at $79.21.

Angola's exit "increases the chances of a pump-at-will oil production showdown," said Robert Yawger, executive director for energy futures at Mizuho Securities USA in a note.


-Giulia Petroni contributed to this report.


Write to Anthony Harrup at anthony.harrup@wsj.com


(END) Dow Jones Newswires

12-21-23 1202ET