Oil prices rose on Wednesday spiralled to their highest level since February 2020 after Saudi Arabia agreed to cut production by more than what was expected at a meeting of the OPEC+ oil cartel. The decline in U.S. crude oil stockpiles also contributed to the rise in prices.

Brent crude rose 0.9% to $54.09 a barrel, the highest since Feb. 26, 2020. It was at $53.82 a barrel after jumping 4.9% on Tuesday.

U.S. West Texas Intermediate (WTI) futures climbed as much as 0.6% to $50.24 a barrel, which also the highest since Feb. 26.

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 which are together referred to as OPEC+.  Other producers in the OPEC+ group agreed to hold output steady as part of the deal.

Oil producers are trying to prop up prices as demand takes a hit from new lockdowns being put in place by countries such as the UK and Germany to fight the new surge in the coronavirus pandemic.

Goldman Sachs said in a note that despite this bullish supply agreement, the Saudi’s decision likely reflects signs of weakening demand as lockdowns return in western countries. However, the investment bank kept its year-end 2021 forecast for Brent at $65 a barrel.

OPEC member Iran’s seizure of a South Korean oil tanker in the Gulf waters on Monday also contributed to the hardening of prices.  Tehran denied it was holding the ship and its crew hostage after seizing the
tanker while building pressure on Seoul to release $7 billion in funds stuck due to U.S. sanctions.

Meanwhile U.S. crude oil inventories dropped by 1.7 million barrels in the week to Jan. 1 to 491.3 million barrels, according to data from industry group the American Petroleum Institute..