(AFP) - Oil prices extended their losses on Tuesday as disappointment over the failure of talks to freeze output outweighed the possible impact of a strike by oil workers in key producer Kuwait.

Prices had plunged early Monday soon after news that the long-awaited meeting of major producers in Doha had collapsed, fanning worries about a persistent global oversupply.

However, the losses were pared through the day on news that thousands of workers in the Kuwaiti oil sector had started industrial action over planned wage cuts.

After a brief rally early Tuesday, US benchmark West Texas Intermediate for May delivery was down 18 cents at $39.60 a barrel at around 0400 GMT, while Brent crude for June fell 27 cents to $42.64.

"It appears that this (Kuwait strike) may be resolved pretty quickly and so the overall interruption would not be large," CMC Markets analyst Michael McCartney told AFP from Sydney.

The strike has seen crude output in Kuwait, the fourth largest producer in the OPEC exporters cartel, dive more than 60 percent.

Oil prices had rebounded last week on hopes that major producers -- including the biggest two, Russia and Saudi Arabia -- would agree to freeze output at January levels.

But Saudi Arabia's decision not to take part unless bitter rival Iran also joined in torpedoed any hopes of a deal. Iran had said it would not agree to any caps having just returned to the export market after years of Western nuclear-linked sanctions.

Analysts said focus will now shift to a key OPEC meeting in June, although BMI Research warned in a note that the gathering was unlikely to see a breakthrough.

"Tensions between Saudi Arabia and Iran will prevent a political consensus from being reached, while the vast majority of oil producing countries will continue to favour winning or retaining market shares rather than supporting prices," it said.

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