Singapore: Crude prices recovered in Asia Wednesday ahead of a meeting between the Iranian and Iraqi oil ministers following a Saudi Arabia-Russia agreement to freeze output.

At around 0600 GMT, US benchmark West Texas Intermediate for March delivery was 10 cents, or 0.34 per cent, higher at $29.14 a barrel.

Its European counterpart Brent crude for April was 20 cents, or 0.62 per cent, higher at $32.38.

Oil prices have tumbled about 70 per cent since June 2014, hit by oversupply, sluggish demand and concerns over the global economic outlook.

Prices have come under renewed pressure from Iran’s return to world markets after the lifting last month of international sanctions linked to its nuclear programme.

The commodity had enjoyed a surge from Friday to early Tuesday as Moscow and Riyadh — the world’s two biggest producers — prepared for talks on a rout that has seen the cost of a barrel collapse and hammered global markets.

But the conditional agreement between Saudi Arabia — the de facto leader of OPEC — Russia, Venezuela and Qatar to freeze output at record January levels, rather than make cuts, left a bad taste in the mouths of traders, sending both main contracts into reverse.

The meeting in Tehran between historic rivals Iran and Iraq — as well as Venezuela — provided some support for the beleaguered commodity Wednesday.

‘Iraq and Iran are the two countries that are going to contribute to growth from the OPEC nations this year,’ Richard Gorry, managing director at JBC Energy Asia in Singapore, said in a Bloomberg Television interview.

‘Getting an agreement from these is going to be very difficult, particularly in the case of Iran,’ he added, referring to the fact the country has only just started exporting after Western nuclear-linked sanctions were lifted.

‘I wouldn’t expect oil to breach $40 until we get into the second half of the year, that’s simply because we’re massively oversupplied still.’

Bernard Aw, market strategist at IG in Singapore, said ‘investors are hoping that these three OPEC members would come to an agreement of sorts to ease the oversupply issue.’

‘However, getting a pact, especially from Iran, is going to be very difficult. As such, the upside potential in oil prices is limited.’