Africa-Press – Angola. The news could not be worse for Angola, with the price of a barrel of Brent, driven by the “world war” of tariffs launched by the US, reaching this Wednesday morning, the 9th, close to 60 USD, 10 less than the average value used by the Government to prepare the 2025 State Budget. And Donald Trump shows no willingness to back down.
Since the USD 70, which served as a reference for the 2025 State Budget, is an annual average value, the pressure on the Executive to review the base document for national accounts is not yet “lethal”.
However, with President Trump’s insistence on his tariff war, which has now taken on unprecedented proportions, with a further 50% increase in tariffs against China, totaling 104%, the inevitability of changing the OGE is clearly within the range of possibilities.
Donald Trump’s decision to add 50% to the 54% tariffs already applied to Chinese exports, in just 72 hours, was the result of Beijing’s response, which, in addition to retaliating with 34% customs duties on Made in USA products, guaranteed that it “will fight until the end”.
And as has always been known, when two elephants fight (the two largest world economies and biggest consumers of crude oil), it is the grass (the countries most dependent on oil exports and with less economic backing) that suffers.
This is the case of Angola, which, in addition to being hit by Trump’s 32% tariffs, is being hit by the abrupt reduction in the price of crude oil (see here) and also by the sharp worsening of the crisis that has been going on in the diamond sector for some time (see here).
Although it has since recovered slightly, at around 09:15, Luanda time, the barrel of Brent, the main reference for national exports, was at 61:30, with losses of 2.45%, at the beginning of the session it reached 60.28 USD, almost, almost 10 dollars below the reference value used for the 2025 State Budget and a record negative value dating back to the period of the Covid 19 pandemic.
The current scenario is dramatic, not only for Angola, but with a strong impact on the weakest and most petro-dependent economies, as is the case here, but it could get even worse if, as Goldman Sachs and JP Morgan anticipate, the global economy enters a deep recession crushed by Trump’s tariffs, which, contrary to what some analysts predicted, badly, in fact, does not seem to be about to back down from this political-economic “Armageddon”.
However, this severe crisis that is looming before the eyes of incredulous analysts may have a response that, if not enough to extinguish it, could generate some relief, in Angola, for example, if OPEC+ were to review, as analysts expect – some even say that the cartel has no alternative – its policy of resuming production eliminated in recent years to restore balance in the markets.
It should be remembered that on April 1, OPEC+, which has brought together the Saudis and Russians in a 2.0 cartel since 2017, began a program to recover production that had been artificially eliminated since 2020 – close to 6 mbpd -, with a further scarce, but symbolic, 138 thousand bpd.
However, at a time when the price of a barrel is falling at record levels and demand is being overshadowed by supply, OPEC+ could not have chosen a worse time to begin the resumption of production, which, according to some analysts, will have to be reviewed if Riyadh and Moscow want to avoid complete disaster.
For example, Goldman Sachs, faced with this scenario, made a substantial change to its Outlook for 2026, raising the average price of a barrel of Brent to USD 58, and does not expect a significant recovery in current values to be seen in 2025.
What does Trump want?
Although there is no solid logic that economists have identified for this tariff war by the US President, in its simplest version, Trump wants to strengthen the consumption of goods Made in the USA to the detriment of imported goods, which are now more expensive.
Furthermore, Trump may be counting on relocating factories that are currently located in the rest of the world, especially in China, to the US in order to avoid these tariffs, pursuing his old idea of reindustrializing the country to “make America great again.”
But leading economists doubt this simple mechanic, anticipating instead widespread rising inflation and a guaranteed long-term recession within the United States in the immediate future and in the rest of the world just around the corner.
How does Luanda view this global scenario?
The current international scenario, which has not been so dramatic for years, since the Covid 19 pandemic, tends to push prices further away from the value estimated in the 2025 State Budget, which is 70 USD.
This is why Angola is one of the countries most attentive to these fluctuations, due to its known dependence on oil revenues, and the importance they have in dealing with the serious economic crisis it is going through, especially in the inflationary and exchange rate dimensions, where the expected surplus (price above 70 USD) could be important to counteract.
This is because crude oil still accounts for around 90% of Angolan exports, 35% of the national GDP and 60% of the country’s tax revenues, which makes this sector not only important but strategic for the Executive.
The Government hopes, in the short and medium term, to achieve the objective of increasing national production, currently close to 1.1 mbpd, generating more revenue in the sector so as to, as has been done for years in countries such as Saudi Arabia or the UAE, use oil money to free the national economy from dependence on… oil.
The increase in national production is not being held back by a lack of potential, because the estimated reserves are nine billion barrels and were already over 1.8 million bpd just over a decade ago, the problem is clearly the disinvestment of the majors operating in the country.
In fact, João Lourenço’s government is also concerned about the continued and predicted reduction in oil production, which is estimated to be around 20% over the next decade, currently standing at just over 1.1 million barrels per day (mbpd), a far cry from its historic high of 1.8 mbpd in 2008.
Behind this decline, among other factors, is the disinvestment across the entire sector, from research to maintenance, when it is known that the national offshore, with the fields in operation, has been in decline for several years due to its ageing, that is, due to its loss of crude oil to extract and multinationals are not demonstrating the interest of recent decades in investing in the country.
The issue of urgent energy transition due to climate change, with fossil fuels being the bad guys, is another factor that is tarnishing the importance of the oil sector in Angola.
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