Oil prices extended gains on Wednesday after Iranian Oil Minister Bijan Zanganeh was quoted as saying Iran supports the decision by OPEC and non-OPEC oil producers to keep a "ceiling" on oil production.

"The decision that was taken for the OPEC and non-OPEC members to keep their production ceiling to stabilize the market and prices for the benefit of producers and consumers, is supported by us," he told the ministry's official Shana news agency.

He was speaking after he met his counterparts from three other producing nations — Iraq, Venezuela and Qatar — to discuss a proposal to freeze output at January levels.

Zanganeh did not explicitly say in his remarks quoted by Shana that Iran would keep its own output at its January level. An Iranian official earlier said Iran would continue increasing its crude output until it reached levels seen before the imposition of international sanctions.

Brent crude was up USD 1.83 at USD 34.01 a barrel by 10:52 am ET (1552 GMT), near a session high. US crude traded at USD 30.51 a barrel, up USD 1.47, also near the highs of the day.

Under a proposal that could lead to the first global oil production deal in 15 years, major producers would freeze their output at January levels. But Saudi Arabia said on Tuesday the deal depended on the cooperation of other big producers.

Shana quoted Zanganeh as saying other oil ministers understand Iran's special situation.

Iran, the Organization of the Petroleum Exporting Countries' fourth-largest producer, might be offered an exception as it seeks to ramp up production following the removal of sanctions over its nuclear program last month, said Ildar Davletshin, analyst at Renaissance Capital.

A freeze in production from the near-record levels in January would do little to relieve the glut, analysts said.

"The market needs a cut, not a production freeze," said PVM analyst David Hufton.

Moves to freeze output at January levels will make little difference to the overall supply-demand balance this year and would not be enough to clear the 600,000 barrels per day surplus projected for the year, analysts at FGE said in a note.

"It could pave the way for further action to be taken should the likes of Saudi Arabia, other OPEC members and Russia deem it necessary," FGE said.

Still, a deal would signal a change in Saudi Arabia's stand.

"The deal doesn't add much to rebalance the market, but it is still important that the parties talk. The Saudis are no longer saying they are fighting for market share but that they are ready to discuss a deal," Davletshin said.

Investors are also eyeing US oil inventory data from industry group the American Petroleum Institute later on Wednesday and official government figures on Thursday for further direction on prices, with a poll of analysts suggesting a gain of 3.9 million barrels in crude oil stocks last week.

First Published:Feb 17, 2016 9:33 PM IST