The majority of analysts interpret Angola’s recent withdrawal from OPEC as a hint that further Chinese investment is welcome. As part of a strengthening of long-standing relations, Beijing may be able to invest more in Angola’s oil and other sectors as a result of the country’s decision to exit OPEC.
Following a disagreement with the producer group on the amount of its output quota, a decision was made. Angola urged for more Chinese investment, especially in the nation’s solar energy, coffee, and battery industries. It also recognized the value of technology, a trained labour force, and strategic alliances that may assist the nation transition away from oil. China might be able to participate more in the oil industry, which has suffered from years of underinvestment, if it is not subject to OPEC’s output restrictions.
Re-engaging with China could be motivated if Angola believes there is potential for them to find fresh investment from China to increase oil output. Since resource-rich African nations ought to diversify their energy and income sources, environmental activists view Angola’s exit from OPEC as a step towards a green transition.
Over the past ten years, Chinese companies have made over $14 billion in investments in Angola, the most of which have gone towards energy. China wants to promote equitable and mutually beneficial cooperation.
Because of disagreement with Saudi Arabia, Angola withdrew from OPEC, leaving Nigeria as the only nation in West Africa producing more than a million barrels per day. Angola joined OPEC in 2007 and contributes approximately 1.1 million barrels per day to the group’s daily output of 28 million barrels.
Angola declined to attend an organization meeting in June of last year, but it did consent to have an impartial third party examine the country’s output baseline. During the November conference, the 2024 baselines for the two countries were lowered. There are no disagreements inside OPEC and Angola may decide to reverse its decision at a later date.
Angola was allowed a daily output quota of 1,400,000 barrels, however it only produced 1.13 million barrels in excess of this amount. The June deal, which permitted the UAE, an OPEC member, to raise the baseline while the baseline was dropped, has never been acknowledged by Angola.
The weak effect of Angola’s withdrawal on oil prices raises concerns about the organization’s attempts to maintain prices through output reductions.
Major oil producer Brazil is scheduled to join OPEC in the upcoming year. Brazil’s daily output of crude oil hit a record 3.7 million barrels in September of last year. Experts caution that Angola’s pullout could be used as a pretext to sell oil and is not indicative of a more serious issue.
Angola is currently operating at maximum output. In order to control output and maintain oil prices, OPEC was founded in 1960 and joined forces with ten additional nations, including Russia, to form OPEC+ in 2016.
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