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Oil prices rose as OPEC compliance to cuts hit 90%
Oil prices were up more than 1 percent on Friday after the International Energy Agency (IEA) said that OPEC’s supply-cut deal achieved a record initial compliance rate of 90 percent. Oil prices are thus building on yesterday’s rise, driven by a bullish sentiment on the markets. The IEA said that it had estimated OPEC’s crude oil output at 32.1 million bpd in January, with record compliance, and some producers, especially Saudi Arabia, cutting more than pledged. When OPEC decided last November to coordinate an output cut to 32.5 million bpd between January and June, the majority of analysts and experts were skeptical about the cartel achieving a high compliance rate, given its track record of breaching promises and tendency to cheat. OPEC’s average historical compliance rate is around 60 percent. But the latest estimates, 90 percent by the IEA, and 91 percent by S&P Global Platts, suggest that this time around, OPEC may have delivered on its promise, at least for January. Both estimates concur that while some OPEC producers are still above their targeted production level – Iraq, in particular – others, like the cartel’s biggest producer and de facto leader Saudi Arabia, are cutting deeper than required.