The conditional agreement to hold oil production steady announced by Saudi Arabia and Russia on Tuesday was a triumph of the art of diplomacy, delivering the maximum rhetorical impact for the minimum genuine commitment. Its careful construction tells you everything you need to know about today’s oil market.

Co-ordinating oil producers to manipulate prices has never been easy, and has been effective only for limited periods, most spectacularly in the 1970s. Since the emergence of US shale oil in the past seven years, it has become just about impossible.

The semi-tough position agreed by Saudi Arabia and Russia may not amount to very much. Oil prices fell sharply in the aftermath of the announcement, although they later rebounded. But in the circumstances, it was the best both countries could have done.

The deal will not take a single barrel of oil off the market to ease the glut that has driven crude prices down about 70 per cent since the summer of 2014. Even the agreement not to increase output depends on other leading producers signing up. On Wednesday, Iran, which plans to increase its production, did not commit to joining the freeze.

Even such a weak agreement — the first between a member and a non-member of Opec for 15 years — is significant as a sign of nervousness among the world’s two largest oil producers. But the fact that Saudi Arabia is not already cutting its output, in spite of mounting signs of financial strain, shows that while its strategy might be painful, it is still rational.

Crude prices at today’s levels are playing havoc with Saudi Arabia’s competitors. Very few large oil projects are expected to go ahead this year, putting a lasting dent in future supplies. The opening up of the Arctic for oil development has been put on hold indefinitely. US shale oil production has remained resilient, but it is falling now, and the industry is about to be hit by a wave of bankruptcies of over-indebted producers. If Saudi Arabia were to cut production now, it might benefit from higher prices, but would also offer relief to its rivals. It is in the kingdom’s interests to continue to stay the course.

Over time, the drop-off in supply resulting from reduced investment worldwide will bring the market back into balance, so long as demand keeps growing. The price will rebound. Oil at about $30 is unsustainably low.

The fundamental problem facing Saudi Arabia, however, is that the extent of the recovery is likely to be limited. Once crude rises much above $50, there will be substantial volumes of US shale production that will look commercially attractive again, bringing extra supply on to the market. Any attempt to hold prices much above that level would probably be fruitless.

Producers have to adjust to a world in which, barring some great political upheaval, we will not see $100 oil again for some time. Companies need to be leaner and fitter; countries need reform to cope with oil revenues that will be lower for many years to come.

The US shale revolution heralds a structural transformation in the productivity of the oil industry, and like any other such advance, it is a net benefit to the world economy. This is sometimes under-appreciated, because the gains are widely spread among all consumers while the pain is concentrated on a smaller number of producers. Overall, however, cheap oil is a stimulus to growth.

We are in a world where co-operation between Saudi Arabia and Russia elicits a yawn and not a shudder. Across most of the rest of the globe, that is surely a cause for celebration.