Saudi Arabia and Russia have agreed to form a working group to monitor the global oil market and draft regulations to stabilise crude prices, according to a joint statement made on the sidelines of the G-20 summit in Hangzhou, China.

Russian Energy Minister Alexander Novak, who said the announcement was a “historic moment”, said that a production freeze would be the only way to stabilise prices.

The Saudi-Russian task force will meet for the first time in October. The joint statement said that stabilising oil prices would ensure steady investment in the industry.

Saudi Arabia and Russia, along with other Opec and non-Opec producers, attempted to agree a production freeze at a meeting in Qatar in April, but talks broke down without a decision.

The Doha meeting, which also included Qatar and Venezuela, broke down as Riyadh said it would not participate without the inclusion of Iran. The cooperation of both Iran and Iraq will likely be essential for a production freeze agreement to be reached.

Representatives from the 14-member Opec plan to meet at a conference in Algiers at the end of September, where the potential production freeze is likely to be discussed.

Brent crude was trading up 2.5 per cent at the time of the announcement at about $48 a barrel. Oil has been trading at below $50 a barrel for the majority of the last two months as concerns on oversupply remain in the market.

Opec output rose by 120,000 barrels a day (b/d) in August to a record 33.69 million b/d.