(Reuters Breakingviews) – OPEC’s un-Merry Christmas just got gloomier. Less than a month after fresh cuts by the Organization of the Petroleum Exporting Countries that nevertheless saw oil prices fall, Angola said on Thursday it was quitting the 13-strong group. It’s a minor rumpus that points to longer-term fissures.
The African state’s exit isn’t hugely surprising: it has chafed against output curbs imposed by de facto OPEC leader Saudi Arabia. But neither is it that damaging to the group’s ongoing effort to keep oil prices elevated, which has seen itself and 10 fellow producers, collectively OPEC+, produce over 5 million barrels a day less than their 49 million daily barrel capacity. Operational issues mean Angola has struggled to produce even its permitted 1.5 million barrels a day: outside OPEC it’s unlikely to massively hike output any time soon.
The 1% dip in oil prices is more likely to reflect two relatively low-probability but high-impact fears. One is that the United Arab Emirates, which has the capability and desire to pump way more oil, flounces out too. The other is that Saudi tires of trying to corral fellow OPEC members to undertake required cuts, and fears a further loss of market share to non-OPEC players like the United States. That could see it produce at its full 12 million barrel daily capacity, as occurred in 2020, which would send oil prices plunging. Neither look imminent, but oil investors now have more to worry about in the new year. (By George Hay)
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