The 2014 slump in global oil prices was bad news for many oil-producing countries, especially African countries that were heavily dependent on oil as a source of revenue. However, thanks to a series of policies and oil production cuts by the Organization of Petroleum Exporting Countries (OPEC), oil prices have been recovering since 2017, and have risen up to pre-2014 levels already in the first few months of 2018.
This commitment to the “coordination and unification of the petroleum policies of Member Countries and the determination of the best means for safeguarding their interests, individually and collectively” by OPEC has made a raft of African countries decide to join the oil-exporting nation bloc.
Congo, Chad, and Asian countries like Malaysia and Indonesia, have submitted applications this year into the OPEC bloc of nations. OPEC’s criteria for admittance into the bloc specifies that “any country with a substantial net export of crude petroleum, which has fundamentally similar interests to those of Member Countries, may become a Full Member of the Organization, if accepted by a majority of three-fourths of Full Members, including the concurring votes of all Founder Members.” The Founding members of OPEC are Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
Equatorial Guinea was admitted as an OPEC member last year, swelling up the ranks of African countries in OPEC to seven. Angola, Nigeria, Algeria, Libya, Gabon and Libya have all witnessed a return to fortune after oil prices began to recover last year. In 2017, Nigeria exited a recession that began when oil prices started to dip. The same story for the other African oil-producers who witnessed some level of economic recovery when oil prices began to rise.
New comers like Congo will be hoping that OPEC’s penchant for protecting the interests of its member countries would help its own economic recovery. Congo is presently mired in debt, with government revenue falling by more than a third since 2015.
The country is also looking to secure a deal with the IMF for bail out programs, although the financial body thinks the Central African country isn’t ready for such. However, its most ambitious project might be joining OPEC. If the move is successful, Congo could become the 3rd highest oil-producer in sub-Saharan Africa.
With more than 2 billion barrels of oil reserves, Congo is an oil giant in the making, putting it in the same class as African countries like Angola and Nigeria. However, the economy of both countries have been aided by many OPEC policies such as its famous production cut deals, where major oil-producing nations have been asked to cut their oil supplies in the hope that oil prices rise.
Nigeria was exempted from one of such cuts last year, with the West African country filling in the gaps left by middle-eastern oil-exporting countries that agreed to the cuts. Congo, by applying for OPEC membership, would be hoping to get such deals.
The oil production cuts seem to be working, along with other market forces that have been favorable, as oil prices have risen and now OPEC is attracting other oil producing countries. While oil producing superpowers like USA, China, Russia, Norway, Canada and others still remain outside of OPEC, and produce the most of the world’s oil, the assimilation of African oil-producing countries into OPEC will still be a major coup.