OPEC, Russia and other non-OPEC nations are likely to turn their production-cutting deal into a longer-term relationship to help fend off the next downturn and make the oil market less volatile.
The agreement to reduce oil output by 1.8 million barrels a day extends through the end of the year, and multiple ministers endorsed retaining a relationship that could help prevent another destabilizing collapse in oil prices, like the one in 2015 and 2016.
"We realized it was a negative sum game; all of us producers and consumers were losing when the oil price went down," said Mohammed Saleh Abdullah Al-Sada, Qatar Minister of Energy and Industry. Al-Sada, speaking at IHS Markit's annual CERAWeek conference, was instrumental in bringing fellow OPEC ministers into agreement on a deal in 2016, when they met on the sidelines of an industry conference in Algeria.
"A year earlier we opened channels with Russia, and again we found they were thinking alike," he said. "We found once we agreed among ourselves, Russia was very positive."
The thorn in the side of major oil-producing nations has been U.S. shale, which started to boom in the last decade as the industry applied and continued to improve new technologies. The message from CERAWeek was that OPEC will continue to hold the market steady, for now.