LONDON, Sept 24: Oil prices rocketed upwards on Wednesday after industry cartel Opec caught the market by surprise in announcing an unexpected 900,000-barrel cut to production ceilings at its meeting in Vienna.

The price of Brent North Sea crude oil for November delivery shot up $1.23 a barrel to $26.75.

New York’s reference light sweet crude October contract was 80 cents higher at $27.93 per barrel.

The cartel will lower its production by 900,000 barrels per day from the current level of 25.4 million barrels, ministers from the Opec said.

Several Opec energy ministers, including Algeria’s Chakib Khelil and Venezuela’s Rafael Ramirez, confirmed the cut to reporters at the cartel’s headquarters in the Austrian capital.

Opec would gather again on December 4, Khelil said, warning of more cuts to come.

“We expect excess supply and increased stocks at the start of next year,” he said.

“We will have a very difficult situation at the start of next year,” requiring a cut to keep prices in Opec’s target band of $22 to $28 per barrel, Khelil explained.

News of the reduction came as a surprise to traders, given that oil prices have only recently fallen back below Opec’s maximum target price.

Iraq is an Opec member but has not been part of Opec’s quota system since UN sanctions were imposed on Baghdad following its 1990 invasion of Kuwait.

“It’s a big surprise, we were expecting them to cut early next year but not as early,” said Commerzbank analyst David Thomas.—AFP