Oil Extends Gain as Iran Backs Output Freeze Without Vowing Cuts

Oil extended gains above $31 a barrel as Iran supported a proposal by Saudi Arabia and Russia to freeze production at near-record levels, without saying whether it would curb its own output.

Futures climbed as much as 3.5 percent in New York after rising 5.6 percent Wednesday. Iran backs any measures to stabilize markets including the output cap, Oil Minister Bijan Namdar Zanganeh said after talks with Qatar, Iraq and Venezuela, according to a report from the Shana news service.

U.S. crude stockpiles are forecast to have increased by 3.5 million barrels last week, according to a Bloomberg survey before government data Thursday.

Oil is still down 16 percent this year after the Organization of Petroleum Exporting Countries abandoned output targets in early December and as U.S. crude inventories swelled.

Zanganeh didn’t mention if Iran, the second-biggest OPEC producer before sanctions were intensified in 2012, would deviate from plans to boost exports after the lifting of penalties last month.

“The market is re-evaluating the downside risks at the moment,” Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney, said by phone.

“There is no expectation whatsoever that Iran will curb exports. Until we see the fundamentals improve, we’re not going to get a sustainable uplift in the price.”