Oil on track for weekly gain on Red Sea disruption fears amid Angola’s Opec exit

Oil prices rose on Friday and were on track to record a second straight weekly gain due to fears about Red Sea supply disruptions, although Angola’s departure from Opec is likely to have a limited impact on the market, analysts said.

Brent, the benchmark for two thirds of the world’s oil, was trading 0.69 per cent higher at $79.94 a barrel at 9.55am UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 0.72 per cent at $74.42 a barrel.

Brent fell by as much as 2.4 per cent on Thursday before cutting some losses and settling 0.39 per cent lower at $79.39 a barrel. WTI closed down 0.44 per cent at $73.89 a barrel.

Angola, Africa’s second-largest oil producer, announced on Thursday that it was leaving the oil producer’s alliance, following a dispute over production quotas.

“We feel that at the moment Angola does not gain anything by remaining in the organisation and, in defence of its interests, it has decided to leave,” Diamantino Azevedo, Angola’s Minister of Mineral Resources, Petroleum and Gas, was quoted as saying by local media.

Angola, which joined Opec in 2007, produces about 1.1 million barrels of oil per day, compared with Opec’s production of about 28 million bpd.

The country’s exit will reduce Opec’s membership to 12 countries and its crude oil production to about 27 million bpd, or some 27 per cent of the global oil market.

Last month, Angola was given a target of sticking to 1.11 million bpd of output in 2024.

“Angola’s departure from Opec is the result of a long disagreement over the quantum of crude oil that it can produce,” said Ehsan Khoman, head of commodities, ESG and emerging markets research at MUFG.

“The country is mired with wide fiscal and external imbalances and underline the government’s resolute vigour in maximising output.

“The challenge remains on reversing the years of underinvestment that have resulted in around 40 per cent production declines in 2008.”

Angola’s departure may result in greater flexibility among the remaining Opec members regarding their production levels next year, analysts said.