"In the short term, this is a positive for oil, but we must question the impact over the longer term unless it's the sign of more to come from OPEC", said Markets.com Market Analyst Neil Wilson.
Saudi Arabia is discussing a proposal that could see the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers cut output by up to 1 million barrels per day (bpd), two sources told Reuters on Sunday, as the world's top oil exporter grapples with a drop in crude prices.
"We are going to do everything we can to keep inventories and supply demand fundamentals within a reasonably narrow band around balance, and we believe markets will calm down", Saudi Energy Minister Khalid Al-Falih said Monday in a speech at an industry event in Abu Dhabi.
Oil prices have shed a fifth of their value over the past month due to oversupply and signs of a softer-than-expected impact from USA sanctions on Iranian crude exports.
OPEC and Russian Federation are set to discuss oil production cuts again, less than a month after both Alexander Novak and Khalid al-Falih assured markets they will ramp up production to offset any supply losses after US sanctions against Iran came into effect.
These countries said they would consider "options on new 2019 production adjustments, which may require new strategies to balance the market".
A meeting between Novak, Al-Falih and other producers on Sunday yielded no formal change in supply policy, but did acknowledge they may need "new strategies".
On Thursday, the United States granted Iraq a 45-day exemption from sanctions which it reimposed on Iran.
Oil collapsed into a bear market in little more than a month, and pressure is mounting on the OPEC+ group to act sooner than their policy meeting in December.
"There is no consensus yet among oil producers about cutting production", Falih said.
Since then, OPEC production has risen 820,000 bpd since May, according to the latest S&P Global Platts OPEC survey.
It was "premature to talk about a specific action", he told reporters, asked about the possibility of an output cut to support sliding prices.
The oil price has fallen by around 20 per cent in the last month, driven lower by a rapid increase in global supply and the threat of a slowdown in demand, especially from those customers, such as India, Indonesia and China, whose currencies have weakened against the dollar and eroded their purchasing power.
The military official also played down Washington's rhetoric and said the United States has time and again hurled such threats against Iran only to find that "they have never had nor will they have" any effect in the future.
"We have to study all the factors", Falih said.