Crude oil futures ended sharply higher on Tuesday, lifted by an announcement from Saudi Arabia that it will cut crude production by 1 million barrel per day from February through March.
The decision of the Oraganization of the Petroleum Exporting Countries (OPEC) and its allies to hold output steady in February further helped push up oil prices.
West Texas Intermediate Crude oil futures for February ended up by $2.31 or about 4.9% at $49.93 a barrel.
Brent crude futures were up $2.51 or nearly 5% at $53.60 a barrel.
Tensions in the Middle East after Iran detained a South Korean vessel carrying ethanol in the Straits of Hormuz contributed as well to the uptick in oil prices.
While Iran says the ship violated pollution rules, the operators of the vessel have denied the allegations. The incident comes amid tensions over Iranian funds frozen in South Korean banks because of US sanctions.
Meanwhile, traders were looking ahead to the weekly inventory data. The American Petroleum Institute will release its weekly report later today, while the Energy Information Administration’s data on U.S. crude inventory is due out Wednesday morning.