90% OPEC oil cut compliance: IEA

OPEC countries are complying almost fully with a landmark deal to reduce the global oil glut, but demand is likely to be more vigorous than anticipated this year, the International Energy Agency said Friday. Under an agreement that came into effect in January, OPEC countries throttled oil output by one million barrels per day to 32.1 million bpd, said the watchdog which analyses energy markets for major oil consuming nations. “The IEA estimates... a record initial compliance rate of 90 percent, with some producers, notably Saudi Arabia, appearing to cut by more than required,” it said.

At the same time, the IEA upgraded its estimates for global oil demand growth for 2016 and 2017. “This first cut is certainly one of the deepest in the history of OPEC output cut initiatives,” it said. At the end of November, the Organization of Oil Exporting Countries agreed to cut output by 1.2 million bpd from January 1, initially for a period of six months. Then in December, non-OPEC producers led by Russia agreed to cut their own output to 558,000 bpd.

The aim was to reduce a glut in global oil supply that has depressed prices, which currently stand at around $50-$55 per barrel. In view of the output cuts, global demand for oil should be more vigorous than initially anticipated, the IEA said. It increased its estimates for third month in row, calculating that demand rose by 1.6 million bpd to 96.6 million bpd in 2016. And it predicted that demand would increase again by 1.4 million bpd to 98 million bpd in 2017. — AFP