Investing.com — Oil prices fell Thursday after Angola decided to exit the Organization of the Petroleum Exporting Countries (OPEC), pointing to a further weakening in the “OPEC put,” stoking worries about the oil producer cartel’s ability to collectively support oil prices by limiting production.
By 14:30 ET (19:30 GMT), the futures settled 0.4% lower at $73.89 a barrel and the contract dropped 0.4% to $79.39 a barrel.
Angola exit adds to further worries about weakening OPEC put
Angola’s oil minister Diamantino Azevedo said it would exit OPEC as membership in the group was no longer serving the country’s interest.
“If we remained in OPEC … Angola would be forced to cut production and this goes against our policy of avoiding decline and respecting contracts,” Azevedo said.
The exit from Angola, which producers over 1.1 million barrels of oil per day, marked a further blow to confidence in the oil-producer group’s to control prices after its most recent agreement was fraught with infighting.
Signs of weakness in the “OPEC put,” or the group’s ability to limit production and support prices, come as rising output from non-OPEC members including the U.S. have stoked concerns about a supply surplus.
The EIA said U.S. crude output rose to a record 13.3 million barrels per day, up from the previous all-time high of 13.2 million barrels.
Concerns of disruptions to supply through Red Sea remain
The Angola exit has overshadowed the ongoing concerns of disruptions to the global supply of crude through the Red Sea and Suez canal following the missile and drone attacks on ships in the Red Sea by the Iran-aligned Yemeni Houthi militant group.
Around 12% of world shipping traffic passes through the Suez Canal, heading mostly from the Mediterranean to the important Asian market.
The United States has announced the creation of a multinational naval task force to defend commerce in the region, but the Houthis have vowed to continue their attacks, which they claim is in support of the Palestinians in Gaza.
The Israel-Hamas war so far has had little impact on oil supplies, but traders remain on edge over the conflict drawing in more Middle Eastern powers, which could tangibly disrupt supplies from the oil-rich region.
(Peter Nurse, Ambar Warrick contributed to this article.)
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