Oil prices fell by more than 1% on Thursday after Angola said it was to exit the Organization of the Petroleum Exporting Countries (OPEC), raising concerns the African nation will not stick to quotas set by the cartel.
Brent crude, the European benchmark oil futures contract, fell 1.1%, to $78.80 a barrel, while U.S. West Texas Intermediate crude shed 1.2%, to $73.29.
The United States Oil Fund (NYSE:USO), an exchange-traded fund that tracks the price of light-sweet crude, was down 0.2% at $68.70 in early afternoon trade in New York.
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African Nations’ Spat With OPEC
Angola currently produces around 1.1 million barrels a day out of OPEC’s total of 28 million b/d. But the nation feels that being an OPEC member is no longer in its best interest.
Both Angola and Nigeria were at odds with OPEC back in November. The dispute was over their production quotas, which they felt were unreasonable compared with the rest of the group. While neither can compete with the likes of Saudi Arabia or the UAE, they felt the cartel should allow them higher quotas.
Alexander Stahel, commodity investor at BGH, said: “Expect UAE to increase their quotas now. Also, let’s monitor Nigeria.”
He added: “Angola didn’t meet its quotas in past years as it struggled from above-average base declines of some 12% a year. But they have the resource. Will they have the investments? Probably easier now. Most Angolan oil is bought by China.”
OPEC has in recent months increased curbs on production output in its efforts to stop oil prices from falling further.
Also on Thursday, the U.S. Energy Information Administration said crude output in the U.S. had risen to a record 13.3 million b/d in the past week, up from 13.2 million b/d in the previous week.
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