OPEC announced it would extend cuts in oil output by nine months to March 2018 on Thursday, after November's landmark deal failed to clear a global supply overhang.
The move, which was then ratified by non-OPEC producers, was the base-case scenario for the market and means the 1.8 million barrel per day supply cut will roll over until the first-quarter of 2018.
In a press conference shortly after the announcement, Khalid Al-Falih, Saudi Arabia's energy and industry oil minister, said, "We considered various scenarios, from six (months) to nine to 12 and we even considered options for a higher cut... All indications are solid that a nine-month extension is the optimum and should bring us within the five-year average by the end of the year."
Oil prices extended earlier losses shortly after the announcement as traders reacted to the developments.
At around 5.20 p.m. London time, Brent was trading 4 percent lower at $51.80 a barrel with the U.S. West Texas Intermediate (WTI) benchmark edging down by nearly the same amount to sit at $49.09 a barrel.
Brent and WTI futures prices have tracked 13 percent and 14 percent higher respectively since this month's lows were reached on May 4.
However, stockpiles remain high and production from non-participating countries, including the U.S., has been rising, capping crude some way below the $60 a level earmarked by OPEC's
"It looks like the next six to nine months can be a 'sweet spot' for the oil market... That said, things get more complicated beyond the near term," Konstantinos Venetis, senior economist at research firm TS Lombard, said in an email.
"OPEC's action should best be viewed as a defensive supply 'taper' in the hope of better demand," Venetis added.