Angola: Cabinda prices drop to three-month low in August
Average Cabinda oil prices fell to USD 70.9 USD per barrel (pb) in August, from July’s USD 75.8 pb. The result marked a 6.4% tumble from the prior month. However, prices were still up a significant 56.2% over the same month last year, partly due to a favorable base effect.
The month-on-month drop in prices came on the back of demand concerns amid the spread of the Delta variant of Covid-19. Chinese authorities reimposed partial lockdowns and travel restrictions in certain areas in late July and August, while several countries in the Asia-Pacific region took similar measures. Meanwhile, output of Angolan Cabinda oil rose from 1.05 million barrels per day (mbpd) in July to 1.10 mbpd in August. Turning to output among other OPEC+ members, production stumbled in Iran and Nigeria, but rose in Iraq, Saudi Arabia and the UAE.
Moving forward, while prices for crude oil have risen since the start of September, the easing of OPEC+ production cuts poses a downside risk as constrained demand and greater supply could weigh on prices ahead. Meanwhile, Angolan output is forecast to ease slightly this year compared to last year due to the effects of previous production cuts, as well as the fallout from the oil price slump in 2020.
Commenting on the outlook for the country’s oil sector and the wider economy in the wake of the global health crisis, analysts at the EIU noted:
“Oil prices have risen, but global oil majors operating in Angola cut capital expenditure and activity following the oil price slump in 2020, which will continue to affect production in 2021. However, non-oil economic activity will improve; mining output will increase as global demand for diamonds recovers and agricultural activity is forecast to rise owing to favourable weather.”