Reports suggest Saudi Arabia has offered to cut production by 1m barrels if its regional rival Iran agrees to freeze output.
The de facto Opec leader's offer comes ahead of widely anticipated talks between the world's biggest oil producers taking place in Algeria next week.
Sources told Reuters that the offer, which is yet to be accepted or rejected by Tehran, was made this month.
"They (the Saudis) are ready for a cut but Iran has to agree to freeze," one source said. Three more sources confirmed the offer was presented to Tehran.
Brent crude, the global benchmark, was last trading up 0.17 per cent to $47.73 per barrel. Its US counterpart, West Texas Intermediate crude, fell 0.39 per cent to $46.14.
A previous attempt to broker a global output freeze deal earlier this year fell through after Iran refused to participate.
Iran vowed to return its production to pre-sanction levels after the US/European embargo in relation to its nuclear programme was lifted earlier this earlier.