Oil prices witnessed a recovery today, Friday, after recording a decline of more than 1 percent yesterday, Thursday. Brent crude futures increased by 0.64 percent to $79.92 per barrel. Meanwhile, U.S. West Texas Intermediate crude futures recorded a 0.64 percent increase at $74.38 per barrel.
This rise came after a decline in oil prices following Angola’s recent announcement of its exit from the Organization of the Petroleum Exporting Countries (OPEC). Hence, Brent crude futures fell 31 cents, settling at $79.39 per barrel, while the U.S. West Texas Intermediate crude futures fell 33 cents, settling at $73.89 per barrel. Angola’s announcement led to a more than $1 drop in both benchmarks during the trading session.
Angola’s decision
Angola’s Minister of Mineral Resources, Oil and Gas Diamantino Azevedo expressed that OPEC membership no longer served the country’s interests. The decision comes after Angola protested OPEC’s November move to cut its production quota for 2024, a decision aimed at increasing oil prices.
Angola, producing around 1.1 million barrels per day, is one of the smallest producers in OPEC. However, its exit raises questions about the unity and direction of OPEC.
Maintaining price control
Matt Smith of shipping tracking firm Kpler suggests that OPEC appears to be losing the battle of keeping oil prices higher. Non-OPEC producers, particularly the U.S., have increased production, filling the supply gap left by OPEC. Hence, the U.S. Energy Information Administration (EIA) reported a record 13.3 million barrels per day in U.S. crude output last week. This added more pressure on OPEC’s attempts to control prices.
Tim Snyder, an economist at Matador Economics, emphasized the increasing role of the U.S. in global oil production. With U.S. crude output reaching record highs, Snyder noted that the U.S. has mitigated price risks domestically. Moreover, it positioned itself as a significant player, challenging traditional oil powerhouses like Russia and Saudi Arabia.
Read: Gold continues upward trend, surpasses $2,030 mark
Geopolitical tensions and global trade disruptions
Recent tensions have forced major maritime carriers to avoid the Red Sea, causing disruptions in global trade. The conflict between Israel and Hamas adds an additional layer of uncertainty to an already volatile oil market.
Analyst John Evans highlighted the market’s edginess in response to increased U.S. crude. He suggested concerns about supply diversion or interruptions due to tensions in the Red Sea and their effects on shipping. The evolving geopolitical landscape continues to contribute to the uncertainty surrounding global oil markets.
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