After Saudi Arabia voluntarily agreed to cut production more than expected at the meeting with allied producers, oil prices rose to their highest level since February 2020 on Wednesday, while industry figures showed that U.S. crude oil stocks were falling last week.
Brent crude rose as much as nearly 1% to $54.09 a barrel, the highest since Feb. 26, 2020. It was at $53.87 a barrel at 0536 GMT after jumping 4.9% on Tuesday.
U.S. West Texas Intermediate (WTI) futures reached $50.24 a barrel, also the highest since Feb. 26, before slipping to $50. The contract on Tuesday closed up 4.6%.
With coronavirus infections spreading rapidly in many parts of the world, producers are trying to support prices as demand is affected by new lockdowns.
Saudi Arabia, the world’s largest oil exporter, voluntarily agreed to cut an additional 1 million barrels per day in February and March, following a meeting on Tuesday. The discounts agreed by Saudi Arabia are included in an agreement to persuade other producers in the OPEC + group to keep production stable.
However, concerns remain that despite the Saudi decision and the supply agreement, it reflects signs of weakening demand in case the lockdows return.
The seizure of a South Korean tanker in the Gulf by OPEC member Iran on Monday also caused prices to rise. Tehran has denied holding the ship and its crew hostage while pressuring Seoul to release $ 7 billion of funds frozen under US sanctions.
Meanwhile U.S. crude oil inventories dropped by 1.7 million barrels in the week to Jan. 1 to 491.3 million barrels, data from industry group the American Petroleum Institute showed late on Tuesday.