Oil prices extended gains in Asia Thursday as traders welcomed comments from Iran's oil minister praising a conditional agreement between Saudi Arabia and Russia to freeze output levels, fuelling hopes for stability in the commodity market.
Bijan Zanganeh said Tehran will "support any measure that can stabilise the market and increase prices" but stopped short of committing Iran to any curbs.
His remarks came after he met his Iraqi, Venezuelan and Qatari counterparts in Tehran on Wednesday where they held their own talks on the global supply crisis.
On Tuesday Saudi Arabia and Russia, the two biggest producers in the world, agreed to limit their pumping but only if others followed suit.
While much-needed output cuts have not been announced, traders consider the latest developments a step in the right direction and providing a welcome respite after crude flirted with 13-year lows last week.
US benchmark West Texas Intermediate for delivery in March was up 50 cents, or 1.63 per cent, at $31.16 and Brent crude for April climbed 25 cents, or 0.72 percent, to $34.75 a barrel.
On Wednesday WTI jumped more than seven percent while Brent added 5.6 percent.
"Prices soared sharply after the announcement (of the conditional freeze) but gains were pared as the market was concerned that the provisional agreement would not gain wide acceptance, especially from Iran, which is set to ramp up production to pre-sanction level," said Sanjeev Gupta, who heads the Asia oil and gas practice at EY.
"However, a supportive statement by the Iranian oil minister restored prices."
Phillip Futures analyst Daniel Ang said any move by Iran agreeing to production cuts will be crucial because they are just ramping up output after nuclear-linked Western economics sanctions were lifted in January.
"If they tone down production and agree to slowing it down or even helping the whole situation then I think that will be a win," Ang told AFP.
In a sign of how the slumping prices are hurting oil-dependent economies, Venezuela on Wednesday ramped up gasoline prices for the first time in two decades, by roughly 6,000 percent and devalued the bolivar currency.
Analysts will be keeping an eye on the release later Thursday of the weekly US Department of Energy inventory report.
The previous report showed US stockpiles fell about 800,000 barrels for the week ending February 5 with traders seeing inventories still at high levels.
"The short-term oil market will remain volatile, responding to the ongoing talks on output levels," Gupta said.