Oil Prices Surge

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Oil Prices Surge

NEW YORK -- OPEC producers on Wednesday agreed to a surprise cut in oil supplies that could raise fuel costs this winter and hamper economic growth.

Ministers decided to reduce output for 10 cartel members, excluding Iraq, by 900,000 barrels a day to new limits of 24.5 million bpd, said Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah. The decision looks set to raise energy bills for oil importing nations during the Northern Hemisphere winter, Reuters reported.

U.S. light crude futures reacted quickly jumping more than $1 per barrel to $27.99.

OPEC had seen world oil prices ease this month to four-month lows, despite a sluggish recovery in post-war Iraqi output. Aiming to keep prices in a $22-$28 band for a basket of their crudes, several ministers entering Wednesday's meeting had said they saw no reason for a change in output, the report said.

The recent price fall and projections that increasing volumes from rival non-OPEC suppliers like Russia were swamping demand growth appeared to change minds, the report said.

Ministers agreed to meet again on December 4 to review policy for the first quarter.