By Alison Sider, Sarah McFarlane and Timothy Puko

Crude futures surged to one-month highs after OPEC agreed to reduce its output by more than 1 million barrels a day, a cut that many market participants say could be significant enough to push oil supplies below demand levels sooner than expected.

Delegates from members of the Organization of the Petroleum Exporting Countries reached a deal in Vienna to cut production by 1.2 million barrels a day from the current 33.6 million barrels, according to people familiar with the matter.

Both U.S. and international oil posted their largest daily gains since February on the news. The Brent benchmark crested $50a barrel for the first time in a month.

OPEC's cut would represent a reduction of about 1% of global output. The group is still trying to resolve a dispute raised by Iraq over how each country's oil production is calculated, they said.

The breakthrough comes after months of on-and-off-again negotiations that made many traders doubt an agreement could be reached. A prior attempt to cut output fell through earlier this year, but analysts said another plunge back toward $40 a barrel in recent weeks and growing output from international rivals put more pressure on OPEC to act.

What they have come up with is a stark reversal in strategy from their last big change in November 2014 when the group essentially lifted all output quotas so its members could compete with a global boom in oil production. That decision led OPEC to record-high production, adding more supply to an already flooded market and eventually dropping prices below $30a barrel, so low that many worried it could fuel a global recession.

A deal to cut more than 1 million barrels a day could keep prices steadily above $60 a barrel by the first quarter of 2017, according to London-based Energy Aspects. That would accelerate the end of a glut that has been slow to come for more than two years after the development of shale drilling and oil-sands production in North America.

U.S. crude futures gained $3.12, or 6.9%, at $48.35 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose $3.44, or 7.4%, to $49.82 a barrel on London's ICE Futures Exchange.

Goldman Sachs said Tuesday that oil markets will likely shift into a deficit -- with demand outpacing new production -- by the second half of next year even if OPEC members keep pumping. Even a relatively modest cut to OPEC's output could speed that along by six months if Russia also agrees to hold its production steady, the analysts said.

"The markets are getting closer to rebalancing. It's just that if they did agree to cut production, it would get the market through the first half of next year with significantly less of an oversupply," said Ann-Louise Hittle, a senior oil market expert at Wood Mackenzie, a consulting firm, said Tuesday.

But many doubt the details of a deal, how it will be enforced or how long it would last. OPEC officials are supposed to make an official announcement later today and those questions will need to be answered, traders and analysts said.

Even with details that come from OPEC, weeks or months could pass before it becomes clear whether and how the group will deliver on its promises, said Greg Sharenow, portfolio manager at Pacific Investment Management Co., which manages $1.5 trillion, including $13 billion in commodities. He will be watching Saudi Arabia's official selling prices in the coming weeks to see if they climbfar enough above expectations to signal the kingdom is serious about cutting supply.

"It looks to me the headlines are overstating the real implications," Mr. Sharenow said Wednesday as news of the deal was leaking out. "It's tough to say this is a pure paradigm shift."

Historically it has been notoriously difficult to ensure that OPEC's members are sticking to agreed-upon production levels, and in recent months members like Iran and Iraq have insisted that they wanted to continue pumping at full tilt.

The degree to which Russia will participate is also unclear. Russia isn't a member of OPEC but has discussed freezing or trimming its output in coordination with the group.

OPEC's production has ramped up recently as members jockeyed for position in negotiations. The International Energy Agency has said OPEC production rose to a record 33.8 million barrels a day in October, with countries including Iraq, Saudi Arabia, andKuwait pumping at or near all-time highs. OPEC has said its production increased by 240,000 barrels a day in October to average 33.6 million barrels.

"The markets are getting closer to rebalancing. It's just that if they did agree to cut production, it would get the market through the first half of next year with significantly less of an oversupply," said Ann-Louise Hittle, a senior oil market expert at Wood Mackenzie, a consulting firm, said Tuesday.

But OPEC isn't the only game in town. Countries outside the cartel now account for about 58% of the world's total output, and producers around the world have opened the taps in recent months. Global production rose 800,000 barrels a day in October, to 97.8 million barrels, according to the IEA. Russian oil production has increased by 500,000 barrels a day in September and October, so even if it agrees to freeze output it would do so at record high levels.

U.S. producers would likely also be quick to strike if prices were to increase, bringing more supplies online. The U.S. rig count has increased steadily in recent months, suggesting that companies could soon begin pumping more oil.

"If OPEC does not come to a deal on supply, we see the oil market surplus extending through 3Q17 because U.S., Brazilian, and Kazakhstan supplies are set to rise sequentially throughout next year," analysts at Bank of America Merrill Lynch wrote earlier this month.

Gasoline futures recently gained 5.9% to $1.4581 a gallon. Diesel futures gained 5.8% to $1.547 a gallon.

Write to Alison Sider at alison.sider@wsj.com, Sarah McFarlane at sarah.mcfarlane@wsj.com and Timothy Puko at tim.puko@wsj.com

(END) Dow Jones Newswires

November 30, 2016 10:42 ET (15:42 GMT)

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