A new agreement between Saudi Arabia and Russia provided some short-term optimism for the oil market that the world’s largest producers could cooperate to shore up global crude prices.

The joint statement, made on the sidelines of the recent G20 summit in China, said a task force would be set up to monitor the oil market and draft regulations to stabilise crude prices. This came on the back of a statement by Opec that members of the 14-country oil producers’ group would meet for a discussion at a conference in Algeria at the end of September.

But remarks from the Saudi oil minister poured cold water on speculation of a widespread oil freeze, with Khalid al-Falih saying it was not something being considered in the immediate future.

On top of this, Iran said it will continue to increase production until it has reached pre-sanctions levels, a position that it maintained during oil-freeze talks earlier in the year.

A National Iranian Oil Company (NIOC) official said on 7 September that Iran is aiming to produce an average of more than 4 million barrels a day (b/d) compared with current levels of slightly more than 3.8 million b/d. NIOC is optimistic this can be achieved by the end of 2016.

The G20 announcement provided a short-term upswing in oil prices, but as of 8 September Brent crude was still trading at under $50 a barrel. 

When Opec representatives meet later this month, it is unlikely that Iran and Iraq, which have the most upside production potential, will agree to freeze at current levels, especially after Saudi Arabia has raised output to record volumes.

Russia’s energy minister Alexander Novak said at the G20 summit that an output freeze would help the market rebalance.

It is clear there is widespread backing for a production freeze among many of the world’s largest oil exporters, but the chances of it being agreed in Algiers or through Saudi-Russian cooperation by the end of this year are slim.