Oil scales 11-month high as Saudi vows output cut

Oil prices rose on Wednesday to their highest since February 2020 after Saudi Arabia agreed to reduce output more than expected in a meeting with allied producers, while industry figures showed U.S. crude stock piles were down last week.

Brent crude rose as much as nearly 1% to $54.09 a barrel, the highest since February 26. It was at $53.87 a barrel at 10:36 a.m. after jumping 4.9% on Tuesday.

Saudi Arabia, the world’s biggest oil exporter, agreed on Tuesday to make additional, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March, after a meeting with the Organization of the Petroleum Exporting Countries (OPEC) and other major producers that form the group known as OPEC+.

Reductions agreed to by Saudi Arabia were included in a deal to persuade other producers in the OPEC+ group to hold output steady.

With coronavirus infections spreading rapidly in many parts of the world, producers are trying to support prices as demand takes a hit from new lockdowns.

OPEC member Iran’s seizure of a South Korean tanker in the Gulf on Monday also continued to support prices. Tehran denied it was holding the ship and its crew hostage while pushing for Seoul to release $7 billion of funds frozen under U.S. sanctions.

U.S. crude oil inventories dropped by 1.7 million barrels in the week to January 1 to 491.3 million barrels, American Petroleum Institute’s data showed.