For Angola, this scenario represents a double challenge. With oil accounting for more than 90% of exports and serving as the main source of fiscal revenue.
Oil prices were mixed this Tuesday, as concerns over excess supply and demand risks stemming from the trade war between Beijing and Washington continued to weigh on traders’ sentiment.
Brent crude, the benchmark for Angolan exports, fell 0.44% to USD 60.77 per barrel, while West Texas Intermediate (WTI), the U.S. benchmark, inched up 0.09% to USD 57.57 per barrel, although paring some of its earlier gains.
Crude oil dropped to its lowest level since early May in Monday’s session, and both WTI and Brent moved into a “contango” market structure—meaning that prices for immediate delivery are lower than those for future delivery. This usually indicates ample short-term supply and weakening demand.
For Angola, this scenario poses a dual challenge. With oil accounting for over 90% of exports and being the main source of fiscal income, prices falling below the critical USD 70 per barrel level—required to balance public finances—leave the national economy particularly vulnerable to budget deficits, reduced foreign reserves, and increased pressure on the kwanza.
Increased production by OPEC+ has led analysts to forecast a crude oil surplus this year and next, after the International Energy Agency (IEA) projected a global surplus of nearly 4 million barrels per day by 2026.
“The continued weakening of Brent’s monthly spread structure indicates that the pressure from excess crude supply is gradually materializing,” analysts at Haitong Securities said in a note quoted by Reuters. “This will dampen market expectations and curb investors’ willingness to chase gains, limiting the oil market’s recovery potential,” the experts added.
Source: Economia & Mercado
