The alliance between Opec and Russia that co-ordinated historic oil-output cuts could last “indefinitely” and be formalised by setting up a new organisation including other major producers, said Russian Energy Minister Alexander Novak.

The production limits agreed by Opec, Russia and allies including Mexico and Kazakhstan have efficiently relieved a global oversupply, Novak told reporters in Moscow on Thursday. This mechanism could be used again to offset future imbalances in the oil market, he said.

“If we keep co-operating, we are giving a signal that we can take joint actions at any time to improve the market,” Novak said. While no decision has been taken yet, ministers from the 24 nations that participate in the current oil-output pact – which expires at the end of the year – will discuss the outline of the plan later this month, he said.

Novak was echoing comments from Saudi Arabia and the Organization of Petroleum Exporting Countries signalling eagerness to continue long-term co-operation. The involvement of Russia, the world’s largest energy producer, was a crucial factor in the effectiveness of the production cuts, which removed a large part of a global stockpile surplus and ended a three-year price rout.

Saudi Energy Minister Khalid al-Falih, who has forged a close bond with his Russian counterpart, previously said he’d like to see co-operation lasting “decades and generations.” The two countries, along with Venezuela, Kuwait, Algeria and Oman, will meet for the Joint Ministerial Monitoring Committee in Jeddah on April 20.

Joint market actions such as production cuts are just one possible way for Russia to work with Opec, with consultations and sharing information among the other options, Novak said. 

“Simply meeting and discussing the market situation has already proved very efficient”, he said.

Source: Bloomberg