Here’s a snap summary, for new readers just tuning in.

Opec as defied sceptics and agreed its first production cut since the financial crisis struck. The oil cartel will shave 1.2 million barrels per day off its output, cutting it from 33.7m to 32.5m barrels per day.

OPEC president Mohammed Bin Saleh Al-Sada announced the deal in Vienna this afternoon, after three days of talks and tension. He called it a ‘historic move’ that would help to stabilise the market.

The deal was achieved thanks to a surprise agreement between Saudi Arabia, Iraq and Iran. Saudi will take the biggest hit, lowering output by almost 500k barrels per day, while Iraq will cut by 200,000. Iran, though, will be permitted to raise its production.

The deal is dependent on non-Opec members chipping in, cutting by another 600,000 barrels per day. The two sides will met in 10 days time; Russia has indicated that it’s on board.

The oil price has surged by over 8% today, putting Brent crude over $50 per barrel.

Analysts, though, question whether the deal will really work (Opec is creating a new oversight committee to try to ensure compliance).

Mike Jakeman, Global analyst & commodities editor, Economist Intelligence Unit, says there are four reasons to be cautious:

• First, it is possible that some cheating will occur. OPEC’s members do not have a good track record of sticking to production quotas.
  
• Second, there has been no firm commitment yet from Russia, the largest non-OPEC producers. It is possible that Russian production could fill the gap left by Saudi.
  
• Third, production even at the lower level of 32.5m b/d is still a high level. There is no threat of an oil shortage that could see the price zoom backup.
  
• Last, if there was a sustained rise in prices, this would be likely to trigger a response from US shale producers, which would in turn push the price down again. We think the lack of a sustained rise in prices will see the deal fall apart within a year
  

I’ll be back tomorrow with more reaction and analysis.

In the meantime, here’s economics editor Larry Elliott’s take:

The price of oil has surged by 8% after the 14-nation cartel Opec agreed to its first cut in production in eight years.

Confounding critics who said the club of oil-producing nations was too riven with political infighting to agree a deal, Opec announced it was trimming output by 1.2m barrels per day (bpd) from 1 January.

The deal is contingent on securing the agreement of non-Opec producers to lower production by 600,000m barrels per day. But the Qatari oil minister Mohammed bin Saleh al-Sada said he was confident that the key non-Opec player – Russia – would sign up to a 300,000 bpd cut.

Russia’s oil minister Alexander Novak welcomed the Opec move but said his country would only be able to cut production gradually due to “technical issues”. A meeting with non-Opec countries in Moscow on 9 December has been pencilled in.

Al-Sada said the deal was a great success and a “major step forward”.

But the news that Saudi Arabia had effectively admitted defeat in its long-running attempt to drive US shale producers out of business was enough to send the price of crude sharply higher on the world’s commodity markets.....

Goodnight, and thanks for reading and commenting. GW

Journalists in Vienna have just been handed the new output table, explaining the details of today’s agreement to reduce output by 1.2m barrels per day.

And it confirms that Saudi Arabia will take the bulk of the cuts, cutting almost 500,000 barrels per day.

Iraq is also on board, with a 210,000 cut, followed by the UAE (-139,000), Kuwait (-131,000) and Venezuela (-95,000). Smaller countries are also doing their bit.

Iran, though, has the green light to keep raising output.

The table also confirms that Indonesia has suspended its membership (because, as a net importer of oil, it didn’t want to cut output and drive the price up).

Onto questions...

Q: Why is Opec’s new floor still 32.5 million barrels, even though Indonesia (which pumps 700k) have been suspended? Surely it should be lower?

Opec officials explain that the 32.5m figure includes Indonesia’s output; other Opec countries will take on its

Q: What happens if non-Opec members don’t deliver a 600,000 cut, as Opec are hoping for?

Mohammed Bin Saleh Al-Sada says that he is confident that non-Opec will deliver their side; and suggests we watch Russia for an official announcement.

Q: So is the deal dead, if non-Opec members don’t agree?

I think non-Opec are ‘almost committed’, replies Mohamed bin Saleh al-Sada. But they aren’t here today, of course, so can’t be included in the announcement.

Q: And how much is Saudi Arabia going to cut?

They will cut 486,000 barrels per day.

The Opec press conference is starting now!

OPEC President Mohammed Bin Saleh Al-Sada of Qatar declares that “We have made a great success today.”

Opec has agreed on the scenario outlined in Algeria, he continues (that was the meeting when the cartel agreed to cut production in principle).

With the co-operation and understanding of all member companies, we have been able to reach an agreement.

This agreement comes from a sense of responsibility for Opec member companies, and for non-Opec member countires, and the health and wellbeing of the world economy.

The market needs to be rebalanced, and that needs couragous decisions from Opec and with the support of other countries.

Mohammed Bin Saleh Al-Sada then confirms that the agreement is that Opec reduces output by 1.2m per day. This will lower its total output to 32,5m per day, effective from January 2017.

And he also confirms that Indonesia has asked to suspend its Opec membership, because as a net importer of oil it will struggle to support today’s deal.

Iran’s oil minister Bijan Namdar Zangeneh has just walked past the press pack, saying that he is “happy” with today’s meeting.

Zangenah adds that Opec is likely to hold a meeting with non-Opec members next week in Doha -- that would be the time for Russia to come on board with its own cuts.

Here’s Reuters’ latest dispatch from Vienna:

OPEC agrees first output cut since 2008, Saudis to take “big hit”

OPEC has agreed its first limit on oil output since 2008, sources in the producer group toldReuters, with Saudi Arabia accepting “a big hit” on its production and agreeing to arch-rival Iran freezing output at pre-sanctions levels.

Brent crude futures jumped 8 percent to more than $50 a barrel after Riyadh signalled it had finally reached a compromise with Iran after insisting in recent weeks that Tehran fully participate in any cut.

The source said the Organization of the Petroleum Exporting Countries had on Wednesday agreed on a proposal by memberAlgeria to reduce production by around 4.5 percent, or about 1.2million barrels per day.

Saudi Arabia would contribute around 0.5 million bpd by reducing output to 10.06 million bpd, the source said, while Iran would freeze output at close to current levels of 3.797million bpd and other members would also cut production.

The source added that OPEC had also suspended Indonesia from OPEC and hence the exact combined reduction was yet to be calculated. The meeting was still ongoing after around six hours of debate.

OPEC watcher Amrita Sen from Energy Aspects said:

“OPEC has proved to the sceptics that it is not dead. The move will speed up market rebalancing and erosion of the global oil glut.”

Before the meeting, Saudi Energy Minister Khalid al-Falih said OPEC was indeed focusing on significant cuts and hopedRussia and other non-OPEC producers would contribute a reduction of another 0.6 million bpd.

Falih said:

“It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017.”

Clashes between Saudi Arabia and Iran have dominated many previous OPEC meetings. But the tone changed on Wednesday with Iranian Oil Minister Bijan Zanganeh saying he was positive since Iran had not been asked to cut output. He also said Russia was ready to reduce production.

“Moscow have agreed to reduce their production and cut after our decision,” Zanganeh said.

Bloomberg’s Javier Blas is pretty excited that Opec has (apparently) agreed to cut production by 1.2m barrels per day:

But the FT’s Neil Hume points out that we need to know more -- like which countries are actually going to cut, and by how much.

NEWSFLASH: Reporters in Vienna are snapping that Opec has reached a deal!

Reuters are quoting one delegate, who says ministers have managed to finalise the draft plan made in September in Algiers.

That means oil production will be cut by around 1.2 million barrels per day, in an attempt to trim supply and push the oil price higher.

The same delegate has also spoken to Bloomberg -- s/he must have been in demand -- and confirmed that daily production will be cut to 32.5m barrels,

We still don’t know the details though -- like which Opec members will actually cut, and how the deal will be enforced.

It’s likely, though, that Saudi Arabia will take the brunt of it (as we covered earlier, Iran isn’t expecting to cut its output).

But it’s enough to keep the Brent crude oil price around $50 per barrel, a 7% surge today.

Oil is surging even higher now, after Saudi Arabia said it could take a ‘big hit’ to get a deal at today’s Opec meeting.

Brent crude has spiked by over 7% to almost $50 per barrel, as traders anticipate that the oil cartel will hammer out production curbs in Vienna today.

Saudi Energy Minister Khalid al-Falih ignited the rally, by telling reporters that Opec could finalise cuts of more than one million barrels per day (the rough target).

He also suggested that some non-Opec members might come on board too, in a co-ordinated attempt to squeeze production down (driving the cost of oil up).

Reuters has the details:

Falih said OPEC was focusing on reducing output to a ceiling of 32.5 million barrels per day, or cutting by more than1 million bpd, and hoped Russia and other non-OPEC members would contribute a cut of another 0.6 million bpd.

“It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017. So we will not do it unless we make sure that there is consensus and an agreement to meet all of the principles,” Falih said.

In other news, inflation across the euro area has inched up to its highest level since April 2014.

Consumer prices rose by an annual rate of 0.6% in November, says statistics body Eurostat.

The service sector drove inflation up, with prices 1.1% than a year ago, followed by food, alcohol and tobacco (up 0.7%).

Fuel and heating costs pulled inflation back, with energy costs 1.1% cheaper than a year ago.

However, the impact of cheap oil may soon drop out of the inflation calculations - especially if Opec agree a production cut today.

There’s also drama in Vienna, as some Opec oil ministers suddenly express real confidence that the cartel will reach an agreement to cut production today.

Brent crude has surged by almost 6% to $49.06, a one-week high, after a flurry of comments from Opec.

Saudi Arabia’s Khalid al-Falih told reporters that Opec is close to reaching a deal. And crucially, he indicated that Saudi was happy with the idea that Iran would freeze production, rather than cutting.

That sounds like a potential concession from Opec’s largest member, which would have to take the bulk of any cut.

Al-Falih was speaking to reporters in the traditional ‘open-room’ session, before the press are thrown out and Opec can get down to business.

The UAE’s representative said the meeting is looking “very positive”, while Nigeria says he thinks there will be a deal.

HOWEVER.... we don’t have a deal yet. And the newswires are also running quotes from Iran which suggest it won’t freeze output....

Mark Carney managed to fire a double-barrelled Brexit warning this morning, urging Westminster and Brussels to avoid the dangers of a badly planned exit.

Perhaps his most important comment was his warning that Britain is Europe’s ‘investment banker’ -- a message that EU firms will suffer if Brexit goes badly wrong.

Carney says:

“The U.K. is effectively the investment banker for Europe.

“These activities are crucial for firms in the European Union economy, and it’s absolutely in the interest of the European Union that there is an orderly transition and that there’s continual access to those services.”

In other words -- if the City suddenly loses its ‘passporting rights’ to offer financial services in the EU, European firms might find themselves paying more for a worse financial service.

So Europe should be careful about letting Britain plunge into a ‘hard Brexit’ in 2019.

That’s also a coded rebuke to ECB president Mario Draghi, who claimed on Monday that the eurozone would be less hurt by Brexit upheaval than Britain itself.

But Carney and Draghi are in full agreement on one matter -- Theresa May must lay out a plan for Brexit, rather than leaving firms in the dark.

The BoE governor says:

“It is preferable that firms know as much as possible about the desired endpoint, what type of relationship would be there, and as much as possible, as early as possible, about the potential path to that endpoint.”

Carney also signalled that Donald Trump risks destabilising the global recovery:

“There is this possibility that the slowdown in the growth in world trade, which we have seen over the past few years, accelerates because of discrete policy initiatives potentially from the world’s largest economy.

“While that might not directly affect the United Kingdom, if it slows the pace of global growth - and we’re an open trading nation, one of the most open nations in the world - it’s going to have a knock-on effect through this economy.”

And on the stress tests, Carney offered some support to Royal Bank of Scotland:

“Its challenge is that it still has legacy issues.... There’s misconduct costs, there’s impaired assets,they’re still working through the so-called non-core assets on which they have made progress.”

“They have made progress over the course of the year, they have identified and made an announcement today about additional actions they will be taking.”

Edward Chan, banking partner at global law firm Linklaters, says today’s stress tests miss one of the biggest threats to the UK financial sector -- Brexit.

“This year’s Bank of England stress test scenarios were drawn up in March; while the adverse scenario incorporates a global growth downturn, capital flows to safe havens and a depreciation of emerging market currencies against the dollar, it does not model the impact of the uncertainty resulting from Brexit negotiations nor the consequences of the actual exit from the EU.

It will be interesting to see how the adverse scenario is modelled in next year’s stress test given the Bank of England cautious response post Brexit.

Fernando de la Mora, managing director at Alvarez & Marsal, explains why the tests matter:

Three banks failed the test for different reasons. RBS failed the test, Barclays received a light fail and Standard Chartered got a qualitative fail.

As has been the case in the US with the Fed, the Bank of England is tightening its stance on stress test capital requirements, making them more binding for banks.

Naeem Aslam, chief market analyst at Think Markets, isn’t surprised that RBS came bottom of the class:

The institute has not made any meaningful headway in relation to all challenges it is facing such as the sale of mortgage-backed securities over in the US [where it could be fined by the DoJ]

There is still no buyer for its Williams and Glyn unit.

Over in the City, shares in Royal Bank of Scotland have fallen by 2.7% at the start of trading following the news that it must strengthen its capital position.

They’re down 5.3p at 191p -- a long way away from 502p, which is the break-even point for the taxpayer to recover the huge bailout of 2008.

Lloyds, who sailed through the stress tests, are up 1.2%.

HSBC and Barclays are up a bit too, while Standard Chartered (who sailed close to the wind in these stress tests) are flat.

Some City analysts has speculated the RBS might fail the tests, and be required to submit a new capital plan.

Kathleen Brooks of City Index says:

RBS’s initial outline includes reducing costs (probably more job losses), reducing risk-weighted assets across the bank, and further asset disposals.

RBS wasn’t the only bank that came in for criticism from the report; Barclays and Standard Chartered were also mentioned. Barclays was cited for its systemic risks, and Standard Chartered missed its tier one capital requirement, but both banks do not need to submit revised capital plans to the BOE. This is good news for Standard Chartered, as there had been some concern for the bank ahead of the publishing of this report due to its exposure to emerging markets and commodities.

Q: How frustrated are you that Royal Bank of Scotland failed this year’s stress tests?

RBS has made a lot of progress in recent years, says Carney, especially around its core business -- to serve UK small businesses and households. However, it still has legacy issues to deal with.

As Carney puts it:

It lost its way over a number of years and did a number of other things...not particularly well.

That’s a coded jibe at RBS’s former boss, the de-knighted Fred Goodwin, whose ambitious growth plans ended in utter disaster in 2008.

Carney emphasises that RBS doesn’t have to raise extra capital; it has to reduce risks assets, to put itself in a stronger position to handle another financial crisis.

Q: How worried are you about President Trump enacting some of his policies on global trade?

Carney says there is a risk that the existing slowdown in trade accelerates, because of “discrete policy initiatives from the world’s largest economy”.

We’re one of the most open trading nations in the world, so if it slows the pace of global growth then it would have a knock-on effect on the UK, Carney explains.

Onto Questions....

Sam Coates of The Times takes the new ball, and asks Carney to clarify his comments about needing an ‘orderly’ Brexit process.

Q: Are you saying that there should be a ‘transitional deal, rather than a cliff edge?

As the prime minister has said, it’s preferable that this process is as smooth as possible, Carney replies.

He says that there will be a transition - either at the end of the negotiations, or during them.

It is preferable that firms know as much as possible about the desired endpoint, and as early as possible about the potential path about that endpoint.

Carney points out that City firms are already wondering how Brexit will affect their operations.

As such, “a decree of clarity when appropriate” will help provide “a smooth and orderly Brexit process”.

Governor Carney also points out that many European businesses rely on the City of London for financial services. So, it’s in Europe’s interest that these firms can still access financial services from the UK.

The United Kingdom is effectively the investment banker for Europe.

Governor Mark Carney begins by saying that Britain’s financial system has “stood up well” to turbulence this year, such as the reaction to Britain’s EU vote.

Carney says the most significant risks to stability are global. He singles out China, where growth is increasingly reliant on borrowing. Capital outflows from China could accelerate, he warns, as the US raises interest rates.

He also suggests that the eurozone could pose additional threats to UK financial stability in future, if the Brexit vote hurts the EU economy.

Carney says the UK’s current account remains “large by historic standards”, adding that the slump in the pound since June shows that international investors expect Britain to be less open to trade, and grow slower, because of the Brexit vote.

The Bank of England is holding a press conference now to explain its bank stress tests, and its latest financial stability report.

You can see it live here.

Here’s the official verdict from the Bank of England’s Prudential Regulation Authority, explaining how RBS doesn’t hold enough capital to cope with a big financial crisis:

• The test did not reveal capital inadequacies for four out of the seven participating banks, based on their balance sheets at end-2015 (HSBC, Lloyds Banking Group, Nationwide Building Society and Santander UK).
  
• The Royal Bank of Scotland Group (RBS) did not meet its common equity Tier 1 (CET1) capital or Tier 1 leverage hurdle rates before additional Tier 1 (AT1) conversion in this scenario. After AT1 conversion, it did not meet its CET1 systemic reference point or Tier 1 leverage ratio hurdle rate. Based on RBS’s own assessment of its resilience identified during the stress-testing process, RBS has already updated its capital plan to incorporate further capital strengthening actions and this revised plan has been accepted by the PRA Board. The PRA will continue to monitor RBS’s progress against its revised capital plan.
  
• Barclays did not meet its CET1 systemic reference point before AT1 conversion in this scenario. In light of the steps that Barclays had already announced to strengthen its capital position, the PRA Board did not require Barclays to submit a revised capital plan. While these steps are being executed, its AT1 capital provides some additional resilience to very severe shocks.
  
• Standard Chartered met all of its hurdle rates and systemic reference points in this scenario. However, it did not meet its Tier 1 minimum capital requirement (including Pillar 2A). In light of the steps that Standard Chartered is already taking to strengthen its capital position, including the AT1 it has issued during 2016, the PRA Board did not require Standard Chartered to submit a revised capital plan.

[explainer: AT1 bonds are capital which is designed to convert into equity if a bank hits trouble. Effectively a buffer to protect a bank from a crisis]

My colleague Jill Treanor is at the Bank of England, and reports that RBS has already announced how it will react to failing today’s stress tests.

Royal Bank of Scotland has emerged as the biggest failure in the Bank of England’s annual health check of the banking system.

The 73% taxpayer owned bank has issued a plan to Threadneedle Street over night intended to bolster its financial strength by an estimated £2bn.

Two other banks – Barclays and Standard Chartered – also struggled in the so-called stress tests which are based on hypothetical scenarios of including falls in house prices and the global economy contracting by 1.9%. Barclays already has a plan in place to bolster its financial position while Standard Chartered has not needed to take any action.

Remember, these tests assessed how the banks would cope with a recession, a housing crash and a halving of the oil price.

Here we go!

Royal Bank of Scotland, the lender bailed out by the taxpayer in 2008, has failed today’s stress tests!

That means RBS must take fresh action to protect itself against a sharp slump in the economy.

The tests also found that Standard Chartered and Barclays would need more capital if the economy deteriorated. They aren’t being forced to raise new money today though.

But HSBC, Nationwide, Lloyds, and Santander UK have all passed.

Good morning. We’ve got two big events on the agenda today.

The Bank of England is releasing its stress tests of the British banking sector, showing how UK’s lenders could cope with a serious economic downturn.

Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland, the UK arm of Spanish bank Santander and Standard Chartered have all been examined closely, plus the Nationwide building society.

The tests will assess if these companies can cope with a sharp recession, a housing market crash, and a clump in the oil price.

Out City editor Jill Treanor explains all:

The Bank has set out an imaginary five-year period in which there is a “synchronised global downturn” under which the global economy contracts by 1.9% – as it did during the financial crisis.

It has also incorporated domestic factors: a 31% fall in house prices, 42% reduction in commercial property prices with the economy contracting by 4.3% and unemployment rising by 4.5 percentage points. The dollar rises against emerging market currencies and the oil price troughs at $20 per barrel.

Here’s Jill’s preview:

The BoE is also publishing its latest Financial Stability Report, showing the main threats to the UK economy following the Brexit vote.

The results come at 7am, followed by a press conference with governor Mark Carney at 7.30am.

But that’s not all!

Over in Vienna, oil ministers are gathering for the latest Opec meeting.

They’ll attempt to hammer out the details of a deal to cap oil output, in an attempt to push up prices. But there’s no guarantee of success.

Iran, Iraq and Saudi Arabia are all taking this meeting to the wire in a display of brinksmanship, so it’s not clear if Opec can agree an overall quota, and decide how it is shared between its members.

Here’s the key timings:

• 10 a.m. Vienna time (9am GMT): Opening session
  
• 12 p.m. noon Vienna time: Closed session
  
• 4 p.m. Vienna time: Press conference.
  

We’ll be tracking all the main events through the day!