The deal will see the group's member countries reduce production by 1.2 million barrels a day to 32.5 million barrels, effective from January.

The 14-country OPEC group accounts for a third of global oil production. Russia, which is not a member of OPEC, has also agreed to cut production – reducing its output by 300,000 barrels per day.

OPEC representatives are due to meet with non-member countries on December 9th.

Oil prices were up by 8% on news of the deal, with Brent crude rising to $50.17 a barrel.

Shares in Shell and BP were both up by around 4%, having risen during much of the afternoon as OPEC's members moved closer to a deal.

In the US, stocks jumped. The Dow Jones industrial average reached an all-time high, up 0.4% to 19,188, and the S&P 500 experienced a similarly record-breaking jolt of 0.1%.

In the UK, the AA's spokesman Luke Bosdet said higher oil prices could "ravage family budgets".

He said: "Throughout 2016, oil market players have speculated that OPEC would set a production cap only for the reality of oil over-supply to dampen their enthusiasm. This has caused the oil price to yo-yo between $40 and $52 a barrel since the spring.
 
"The question then is, even with OPEC agreement to cut production, whether continued abundant supply pulls the oil price back down again. The problem is the length of time it takes for that to happen and how high the market sends the price of oil.
 
"A long spell of higher prices, aggravated by a weak pound, could ravage family budgets as badly as the added cost of winter motoring."

A glut of supply on world markets amid slowing demand for energy has put the oil price under severe pressure and before OPEC's deal was announced it was sitting at less than half its mid-2014 level.

The group had failed to reach an agreement over a number of meetings earlier this year, including one in April when efforts were foiled by rivalry between Saudi Arabia and Iran.

The Saudis had said then that they would only cut production if Iran agreed to do the same.

But Iran, recently readmitted to world oil markets since the nuclear deal between Iran and the US in 2015 and now free of economic sanctions, was anxious to increase production and make the most of its improved position.

Going into Wednesday's meeting, however, Saudi energy minister Khalid al-Falih had been optimistic.

He had said that the kingdom was prepared to accept a "big hit" to its own production and to agree that rival Iran could freeze output at the same levels they had been since before sanctions were imposed.

Those remarks were seen as a compromise after Riyadh's previous stance on its rival's oil production levels.

News of the deal will also come as a relief to poorer OPEC members, such as Venezuela, which is struggling with severe food shortages and inflation predicted to reach 700% this year.

Venezuela relies on the oil and gas sector for around 25% of its GDP.

Additional reporting by IRN