IEA executive director Fatih Birol said the Saudi-Russia agreement was a "first step" toward creating market stability; while Iran, whose oil exports have already been freed from Western sanctions, is yet to agree to any deal, and its participation in restricting production will be vital.

Yet both Birol and OPEC secretary general Abdalla el-Badri agree that market signals are still pointing to more depressed prices.

It doesn't help that US Gulf of Mexico oil production is expected to reach record high levels next year, even as oil price remain low, according to the US Energy Information Administration.

The EIA projects GOM production will average 1.63 million barrels per day in 2016 and 1.79MMbopd in 2017, reaching 1.91MMbopd in December 2017.

GOM production is expected to account for 18% and 21% of total forecast US crude oil production in 2016 and 2017, respectively.

While production in the GOM is less sensitive to short-term price movements than onshore production in the Lower 48 states, the EIA said decreasing profit margins and reduced expectations for a quick oil price recovery have prompted many operators to pull back on future deepwater exploration spending, and reduce their active rig fleet by scrapping and stacking older rigs, or restructuring or delay drilling rig contracts.

These changes add uncertainty to the timelines of many GOM projects with those in the early stages of development at greatest risk of delay or cancellation.

"This is historical," Birol said.

"In the last 30 years, we have never seen oil investment decline for two consecutive years."

Davy Research said on Friday it suspects that "we are not even close" to the bottom of the oil price cycle, based on the assumption that most non-OPEC producers would not countenance new investment at these price levels.

"However, the impact on supply will be slow. Although crude pricing may recover (and we think it will), it will take time and will not attain the same levels as before, with the US light tight oil industry acting as a de facto swing producer," Davy Research said.

"Our conclusion is that oil prices are currently close to a level that makes the industry's ability to provide additional oil to meet future demand unsustainable."

While the firm's previous forecast was that a long-term price of $US80/barrel would meet the demand in the market, the cost reductions involved now has Davy believing that a long-term price of $70 is more likely.

Its short- term forecast is $40 for 2016 and $50 for 2017.

The IEA said in its Medium-Term Oil Market Report that the agency expects global oil exploration and production capital expenditures to fall 17% this year after a 24% cut in 2015 - which would be the first time since 1986 that upstream investment has fallen for two consecutive years.

Launching the IEA's report at IHS CERAWeek in Houston this week, Birol said that while it's all too easy for consumers to be lulled into complacency by ample stocks and low prices, "… they should heed the writing on the wall: the historic investment cuts we are seeing raise the odds of unpleasant oil security surprises in the not-too-distant-future".

Birol said that if the OPEC-Russia deal was unsuccessful, "maybe we can take other steps in the future", but would - or perhaps could - not elaborate.

Either way, KPMG was extremely sceptical about the efficacy and even legitimacy of any such deal.

"First, the agreement threatens to be undermined by signatories ‘cheating' the production freeze," KPMG said in its latest Market Update this week.

Saudi Arabia, Russia, Nigeria, Venezuela and Iraq, for example, are under immense pressure to "balance the books" through high crude exports to offset low prices; and KPMG says that unless the agreement is unanimously adopted it would be "little surprise" if the imposed restrictions were flaunted.

"Second, and perhaps more concerning is the fact the deal is subject to other powers joining in," the firm continued.

"This is a major stumbling block considering Iran's fractious relationship with rival Saudi Arabia and ambition to re-establish itself as a central crude exporter after a number of years in the cold due to global trade sanctions over its nuclear program."

KPMG also said the ability of the deal to achieve its overarching goal - stimulating a crude price lift - also remains debatable.

"Freezing production levels - effectively at historically high levels - will not ease the overhanging supply and with the global economic outlook appearing gloomy, it is understandable that the ‘impact' of this deal may be more symbolic than hardened by fact or action," the firm said.

The IEA's latest report sees 4.1MMbopd being added to global oil supply between 2015 and 2021, down sharply from the total growth of 11MMbopd from 2009 to 2015, as upstream investment dries up in response to the current glut pressuring prices.

The IEA believes US production will hit an all-time high of 14.2MMbopd by the end of the forecast period, but only after falling in the short term.

The agency sees light tight oil output declining by 600,000bopd this year and by a further 200,000bopd in 2017 before a "gradual recovery" in oil prices, combined with further improvements in operational efficiencies and cost cutting, allows production to resume its ascent.

The US is still the largest contributor to supply growth during the forecast period, accounting for more than two-thirds of the net non-OPEC increase. Freed from sanctions, Iran leads OPEC gains: Iranian oil output is set to rise 1MMbopd to 3.9MMbopd by 2021.

The IEA's report sees global oil demand growing at an average rate of 1.2MMbopd through 2021, crossing the symbolic 100MMbopd mark towards the end of the decade before reaching 101.6MMbopd by 2021.

The agency believes Indian consumption will race ahead as more motorists take to the roads, while Chinese demand growth cools in tandem with the economy as global oil trade continues its pivot towards Asia.

China debate

While KPMG has recently voiced its opposition to the market's overall bearishness about China, its Singapore-based associate director, commodity and energy risk management for ASEAN, Oliver Hsieh, urged some caution on the Asian giant.

He said that while fluctuating supply and demand fundamentals have given the market a rollercoaster ride of late, a careful eye should be cast over China's ability to absorb further crude volumes in the long run - a trend that has persisted over the last 18 months.

"Moderating economic growth could add to the crude price storm and dilute a demand that has supported falling prices," Hsieh said.

"If Chinese crude demand were to lose steam, a plunge in prices is likely to be the end result."