Oil prices fell on Tuesday despite Saudi Arabia and Russia agreeing to freeze oil output at January levels if other producers follow suit.
The announcement came after ministers from the two nations met in Doha along with their counterparts from Venezuela and Qatar.
Brent crude, which had risen more than 5% earlier, finished down 3.2% at $32.33 a barrel, while US crude was down 2% at $29.14.
Oil prices have sunk from their recent peak of about $116 in June 2014.
Saudi Arabian oil minister Ali al-Naimi said: “Freezing now at the January level is adequate for the market. We don’t want significant gyrations in prices, we want to meet demand. We want a stable oil price.”
Venezuela’s oil minister, Eulogio Del Pino, has been visiting major oil producers in recent weeks to rally support for the idea of freezing production at current levels in an effort to stabilise prices.
He said: “We have reached a historic deal for Venezuela and other countries in favour of market stabilisation.”
Shortly after Tuesday’s announcement, Mr Del Pino said he would travel to Tehran to meet ministers from Iraq and Iran on Wednesday.
Iraq’s oil ministry said the country was also ready to commit to a production freeze if a deal was reached among other producers.
Iraq announced record oil production in January, when output from all its fields – including those in the semi-autonomous region of Kurdistan – averaged 4.7 million barrels per day.
It is Opec’s second largest oil producer, according to the International Energy Agency.
But Iran’s petroleum minister, Bijan Zangeneh, said that the country would “not forego its oil market share”.
Iran is keen to recover lost ground after western sanctions were lifted recently, adding to fears about oversupply.
It aims to raise crude production and exports to one million barrels a day.
The country’s deputy petroleum minister, Rokneddin Javadi, said on Sunday that Iran had increased its crude oil production to 400,000 barrels a day. That figure was expected to increase by another 200,000 barrels.
Iran made it first oil exports to Europe last weekend and has also been increasing supplies to Japan.
Analysts believe Tuesday’s meeting indicated some progress but many remain sceptical about whether a concrete agreement among the major producers can be achieved.
In the face of competition from US shale producers, Saudi Arabia and its Opec allies in the Gulf have followed a strategy of raising production to protect market share rather than prices.
Russia, which last agreed to cooperate with OPEC back in 2001, never followed through on its pledge and raised exports instead.
Its deputy prime minister, Arkady Dvorkovich, has said freezing production was not an issue for Russia as he expected oil output to be flat this year compared with 2015.
Dominic Haywood, an Energy Aspects analyst, said: “While it’s a positive step, I don’t think it will have a huge impact on supply/demand balances, simply because we were oversupplied in January anyway.”
City Index analyst Fawad Razaqzada said the move had disappointed the market slightly because many had hoped for a cut rather than a production freeze.
“In the short term, oil prices may come under some pressure. Nevertheless, it is a step in the right direction and if other major producers follow suit then at the very least it should help to prevent oil prices from suffering further big falls,” he said.
Tensions also remain between Saudi Arabia and Russia over Syria.
Russia is supporting President Assad’s regime, with help from Iran while Saudi Arabia as the regional Sunni power is backing opposition forces.