Fabric asks for password even though I can SSH using credential

I had to update fabric (probably after osx update):

sudo pip install --upgrade fabric

You can add:

ssh.util.log_to_file("paramiko.log", 10)

To the top of your fabfile, after the imports, to get more detailed information about the authorization process.

For me, I had to reset SSH agent identities with:

ssh-add -D

Then add my key back with:

ssh-add -K keyname

Careful, this will delete all identities from SSH agent.