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It's a two-month streak for the Organization of Petroleum Exporting Countries’ (OPEC) November deal to curb oil output and save the crippled bottom lines of the world’s fuel industry.
A new Reuters survey on Tuesday found that compliance to the agreed cuts had risen to 94 percent amongst the bloc’s members in February. In total, OPEC reached a deal to reduce output by 1.2 million barrels per day for at least the first six months of 2017, while eleven non-OPEC producers agreed to cut around half as much altogether.
Brent barrel prices are currently trading around $55 dollars, but industry leaders hope that further compliance to the agreement’s terms will push prices closer to $60.
"If compliance is high by OPEC and non-OPEC, then I think prices will reach $60," an OPEC delegate told Reuters. "If it was higher it would be better, but $60 is fine."
In January, OPEC reported that it had met its goal by 90 percent, while a Reuters survey claimed it had only reached an 82 percent compliance rate. Most of the cuts were made by Saudi Arabia, which, as the bloc’s de facto leader, is due to make the largest output reductions at 486,000 bpd.
Related: OPEC Struggling To Hold On To Asian Market Share
The KSA’s real cuts have been closer to 744,000 in order to compensate for the weak performance of Algeria, Iraq and Venezuela – ironically, three countries that desperately need oil prices to shoot upwards for the future of their political systems.
The oil price crash has dramatically reduced investments in global oil and gas exploration and production, with spending dropping by 26 percent in 2015 and another 22 percent last year, for a combined drop equal to above $300 billion. The industry cannot afford to see investment drop due to low barrel prices for a third consecutive year, according to OPEC Secretary-General Mohammad Barkindo.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…