Hopes that Biden’s Angola trip may help lower pressure on oil markets

US President Joe Biden is set to visit Angola on Monday, fulfilling a promise made in 2022 and marking the first visit by a US president to the Sub-Saharan African country.

Market watchers expect the three-day trip to enhance American presence in the resource-rich region, countering China’s increasing influence in the area. With Biden’s presidency ending in less than one month, President-elect Donald Trump is likely to inherit the close partnership with Angola when he takes office next month. 

Market participants will be closely watching any signals from Biden regarding increasing oil infrastructure investment in Angola, although there are no specific energy projects. According to the International Trade Administration, Angola holds significant oil and gas resources with approximately 9 billion barrels of proven crude oil reserves and 11 trillion cubic feet of proven natural gas reserves. The country is a leading oil and gas producer in the continent, surpassing Nigeria and Algeria. 

International players dominate the oil exploration and production sector, with TotalEnergoies, Chevron, Exxon Mobil, and BP holding market shares of 41%, 26%, 19%, and 13% respectively. Although Biden’s term is drawing to a close, the incoming Trump Administration is expected to prioritise fossil fuel production. The ongoing collaboration between the US and Angola may encourage further drilling activities by American oil producers.

Oil markets may face further pressure

Despite these implications, crude oil prices edged higher following better-than-expected China’s manufacturing PMI in the early Asian session on Monday.

However, crude markets experienced a more than 4% slump to a near three-year low last week amid easing tensions in the Middle East. Oversupply concerns remain a key bearish factor for the energy markets. 

Markets will also closely watch the upcoming OPEC+ meeting on 5 December. The group is highly expected to postpone its plan to unwind its oil cuts started in 2022 due to weak demand and accessive supply.

With Biden’s trip to the oil-rich African antion, Trump’s “drill, baby drill” stance, and China’s slowdown, oil markets are likely to face further downward pressure. 

Diverting critical minerals from China

Additionally, a key highlight of Biden’s trip will be the US-backed railway project,  Lobito Corridor, which connects Angola with the Democratic Republic of Congo (DRC) and Zambia.

The project aims to facilitate the transportation of critical minerals, such as copper and cobalt, to the West. These minerals are key components of batteries and electric cars. The 800-mile project is considered a major strategic move of the Biden administration, aiming to bolster the supply chain of these essential materials, especially in light of increasing investments by China and Russia in Angola.

In 2022, Biden pledged $55bn (€52bn) in investments for Africa over three years, while China has already committed $50bn (€47.5bn) to African projects through its Belt and Road Initiative. Biden is also expected to deliver speeches on public health, agriculture, and the preservation of cultural heritage during his visit to Angola.