Saudi Arabia and Russian Federation said they favor prolonging oil-output cuts by global producers through the end of the first quarter of 2018, setting a firmer time frame for a likely extension of the curbs into next year.
Meeting on the sidelines of China's One Belt One Road conference in Beijing, energy ministers from the two countries said supply cuts should be prolonged for a further nine months, ie, until March 2018, from June 2017 as originally scheduled, to rein in a global glut that is preventing prices from firming up.
Brent crude, the global benchmark, had risen US$1.20 to US$52.04 a barrel by 0847 GMT and traded intraday at US$52.26, the highest since April 26.
OPEC and Russia Extending the cut was broadly anticipated, yet the timing and wording of the statement sent crude prices up more than 1.5 percent in Asian trading.
A second source said he expected Iran would probably agree to a nine-month extension when Opec and non-Opec producers meet to set policy on 25 May in Vienna, provided that other producers such as Iraq were also on board.
Russian Federation and Saudi Arabia, the largest of the 24 nations that agreed to a deal to cut production for six months starting in January, are reaffirming their commitment to the deal amid growing doubts about its effectiveness.
Members of the Organization of Petroleum Exporting Countries agreed in November to cut 1.2 million barrels a day of oil production.
The Saudi-Russia announcement on Monday will probably extend a price rebound that began last week, though the rally is "modest" compared to the increase when OPEC cuts were first agreed to late a year ago, Goldman Sachs analysts said in a report.
"In our view, it also suggests that they believe the global crude market ultimately easily accommodates U.S. shale oil production and that further United States production growth may be needed as major conventional sources of supply suffer from the extraordinary reductions in capital spending in 2014-2017".
Recent US gasoline demand, a closely-watched metric, is down by nearly one-quarter of a million barrels per day from a year ago.
"The market is certainly reacting to comments from Saudi Arabia and Russia's ministers, and it should help at least maintain current prices", Will Yun, commodities analyst at Hyundai Futures, told The Independent.
"The two ministers agreed to do whatever it takes to achieve the desired goal of stabilizing the market and reducing commercial oil inventories to their 5-year average level", it added.
The currencies of resource-linked economies got a boost from the jump in oil prices.
After the price of oil started to plunge three years ago, Opec - in particular Saudi Arabia - stood by, hoping the financial pressure on USA shale would force it to cut back.
In addition, US oil production is rising very quickly and is now up more than 10 per cent since mid-2016 to 9.3 million bpd. Sloup says it could surpass that if buoyed by higher prices.