Angola Commodities March 2022

Angola: Cabinda prices soar to near-decade high in March

Cabinda oil prices soared to USD 121.0 per barrel (pb) on average in March, up from USD 99.1 pb in February. March’s rise marked a 22.1% increase over the prior month and an 84.1% jump over the same month last year. Moreover, the average selling price marked the highest level since May 2012.

The price rally was driven by Russia’s invasion of Ukraine leading to widespread bans on Russian oil imports. Sanctions are expected to deliver a heavy blow to Russian exports, while OPEC+ refused to accelerate its output increases. However, prices eased somewhat during the month after spiking in early March, as the U.S. pledged the largest oil reserve release in its history, while demand headwinds intensified amid a firming U.S. dollar, rising inflationary pressures and strong lockdowns in China. Turning to output, production of Angola Cabinda oil was stable in March at February’s 1.2 million barrels per day (mbpd) according to OPEC+ data. Output among other OPEC+ members diverged somewhat. Production in Algeria, Iraq, Kuwait, Saudia Arabia and the UAE rose, while output fell in Libya, Nigeria and the Democratic Republic of Congo.

In early April, prices for the black gold trended down before reversing trend midway through the month. Developments in Ukraine and the evolution of sanctions on Russia will have a significant impact on the price level for oil going forward. While higher prices bode well for other oil-exporting countries, Angola’s fortunes are less rosy.

Analysts at the EIU explained:

“In view of Angola’s maturing oilfields, we expect oil output to decline until 2023 and recover only from 2024–2026. We expect economic growth to move in line with the pattern of oil production, with GDP growing by 5% in 2026, up from 2.6% in 2022. […] Angola will benefit less from higher average oil prices than some other oil-exporting economies, where operations are cheaper and the business environment is easier to navigate.”

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