Asian oil buyers are increasingly becoming confident that Angola’s exit from OPEC will prompt the West African producer to sharply boost production without restrictions and offer more cargoes at a time when turbulence in the Middle East is keeping importers in the region on the edge.
As the first signs of rising production this year become visible – output in Angola in March rebounded from a four-month low in February – Asian countries like China, South Korea, Thailand and India see this as a positive development, as it will add to the region’s supply sourcing flexibility.
“As the largest recipient of Angolan crudes, Asia will generally benefit from Angola’s oil supply now as it will be free of restrictions since they are now outside of OPEC,” said Kang Wu, global head of oil demand research, S&P Global Commodity Insights, based in Singapore.
As recently as 2010, Angola was producing a record 1.9 million b/d of crude, but has since seen its production fall due to insufficient investment, a lack of exploration activity and the wider departure of international oil companies from mature basins and fields in West Africa. Its output dipped below 1 million b/d in March 2023, but has since recovered.
The share of African crude oil in India’s total crude imports dropped to its lowest level in 2023 as refiners took record volumes of discounted Russian oil and raised purchases from Middle Eastern producers under annual deals. Indian refiners traditionally have been mostly buying African oil through spot tenders. However, the nation’s thirst for African oil has been recently dampened due to plentiful availability of Russian oil sold at deep discounts.
As reported by S&P Commodity Insights, India’s crude imports from West Africa were about 600,000 b/d in 2019, according to S&P Global Commodities at Sea. The volume dropped to about 200,000 b/d in 2023. Out of the 200,000 b/d West African oil imported in 2023, only about 60,000 b/d came from Angola, compared with a high of 119,000 b/d in 2019.
“There were two main reasons for crude imports dropping from Angola. First, there was an overall drop in West African imports due to a rise in the share of Russian barrels, and secondly declining production in Angola,” said Himi Srivastava, South Asia oil analyst at S&P Global Commodity Insights.
