Vladimir Pereira, an oil market analyst at PetroAngola, told Lusa that the drop in the price of Brent oil to less than $70 per barrel, the price stipulated in Angola's General State Budget (OGE) for 2025, is “worrying”, due to the “excessive dependence on oil revenues” to cover the country's financial needs.
Last week, the price of a barrel of Brent oil was traded at 68.56 dollars, representing the lowest value since 2021, with the last sales session closing at 70.36 on Friday and opening trading at 69.88 on Monday.
According to the analyst, this price level has a double impact on the national economy, affecting the collection of tax revenues and the activity of oil companies, which have most of their activities offshore, with greater complexity and costs than onshore.
“Oil prices below the limit that companies consider sustainable could imply cuts in investments and even delays in strategic projects, which if executed in a timely and planned manner, would have a significant impact on national oil production,” he said.
For the economy, Vladimir Pereira highlighted that if the current scenario persists for a long period, it is foreseeable that there will be a downward budget review of the current OGE, “both in the price of oil and also in the expenses stipulated and programmed for this year”.
In the short term, the same source added, it is recommended that the Executive closely monitor the market situation and adopt measures to captivate expenses.
“These are measures that are part of the public finance management instrument and aim to freeze or postpone expenses in order to ensure the best execution of public spending”, he highlighted, recalling that, in 2023, these were the measures adopted by the Government, in difficulties in collecting revenue.
Looking at the economic outlook for 2025, given the international situation, Vladimir Pereira said that a price for a barrel of Brent oil is expected to be around 74 dollars, supported by factors linked to demand that “is weakened at this very moment”.
“The United States has tariff policies that have a negative impact on oil demand and there is also the issue of increased production outside OPEC+ [the expanded group that includes members of the Organization of the Petroleum Exporting Countries], which this year will see these countries continue to increase their production,” he stressed.
In this consultant's view, the possible peace agreement between Russia and Ukraine could free up Russian oil on the market, with “strong expectations that there will be an excess of supply in contrast to the deteriorating demand”, due to the factors he pointed out.
The expert also mentioned that the economic growth forecast for Angola this year is estimated at around 4 percent, with the oil sector growing around 1.6 percent, forecasts that may be revised downwards with the reduced price of oil.
“Because it impacts the Government's ability to collect more revenue, which it then invests in programs to ensure that the economy functions and, on the other hand, it also has an impact on oil companies, which start to adopt a capital discipline regime, cutting investments”, he highlighted.
