Oil prices rose on Tuesday after a severe disruption to Libyan oil supplies and on comments from officials suggesting OPEC could extend its production cuts deal to the end of the year.
Production at the western Libyan fields of Sharara and Wafa has been blocked by armed factions, reducing output by 252,000 barrels per day (bpd), about a third of production, said a source at the National Oil Corporation (NOC).
NOC has declared force majeure on crude loadings from the Sharara oilfield.
Prices for front-month Brent crude futures, the international market benchmark, rose 57 cents, or 1.1 percent, to $51.32 per barrel by 2:36 p.m. ET (1836 GMT). It touched a session high of $51.87.
West Texas Intermediate (WTI)futures, the U.S. benchmark, settled 64 cents, or 1.4 percent, higher at $48.37 a barrel. The contract earlier rose to $48.74.
"The closure of two Libyan oil fields ... is supporting the market today with the timing of a potential restart uncertain after militias in western Libya shut key pipelines," Tim Evans, an energy futures specialist at Citi Futures said in a note.
"Past outages have ranged from a few days all the way up to two years, although the need for oil revenues will be a strong incentive to negotiate a pipeline restart sooner rather than later."
Iranian Oil Minister Bijan Zanganeh said a global deal aimed at reining in a glut that crushed prices for about two years is likely to be extended beyond June, but that time is needed to discuss the subject thoroughly first.
Russia, a non-OPEC member, is seen as a wild card and 15 years ago failed to deliver on promises to cut in tandem with OPEC. However, Russia and Iran will continue cooperation in reducing oil output, according to a joint statement signed by both countries.
Non-OPEC member Azerbaijan also said it was ready to join an extension of the deal into the second half of this year.
Major oil traders gathered in Switzerland this week said they expected OPEC and non-OPEC producers to extend their pact to curb output in the second half of this year, providing Russia complies.
But gains were capped amid a resurgence in U.S. oil production and the expectation that inventories would build up once again, illustrating the persistent global supply overhang that has depressed prices for nearly three years.
Analysts polled by Reuters ahead of weekly data forecast U.S. crude oil stocks rose 1.2 million barrels last week to a fresh record.
Data from the American Petroleum Institute is due at 4:30 p.m. followed by the report from the U.S. Energy Information Administration data at 10:30 a.m. on Wednesday.
Saxo Bank Head of Commodity Strategy Ole Hansen said supply remained in focus ahead of the EIA oil stocks report on Wednesday, "where an increase of more than 322,000 barrels will see Cushing hit a record".
Rising stocks at the Cushing, Oklahoma, storage site and delivery point for WTI tend to depress the U.S. benchmark, widening its discount to Brent, which in turn makes U.S. crude oil attractive to importers.
U.S. crude exports are poised to pick up, analysts and traders said, as rising domestic production has pushed WTI's discount to Brent to its steepest since the United States lifted a ban on exports in late 2015.