Oil prices soared Monday after top producers unveiled a shock output cut of more than a million barrels, while equities mostly rose after data showed US and European inflation eased further last month.

However, the decision by the Organisation of the Petroleum Exporting Countries OPEC+, the cartel, which has other top non-OPEC oil-exporting nations, fanned concerns about a fresh spike in prices that could put pressure on central banks to push interest rates higher.

Both main crude contracts jumped almost six per cent at one point following the cut by Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Algeria and Oman, which was the biggest since the group slashed two million barrels per day in October.

It came on top of a Russian decision to extend a cut of 500,000 barrels per day, and in spite of US calls to increase production.

A Saudi energy ministry official “emphasised that this is a precautionary measure aimed at supporting the stability of the oil market”, according to the official Saudi Press Agency.

Crude prices have come down over the past year as concerns about a possible recession caused by higher borrowing costs have offset supply worries sparked by sanctions on Russia over its invasion of Ukraine.

“The production cut, coming at a time of an uncertain global demand environment clearly shows OPEC was not happy with the movement in the oil price which had fallen over recent months,” said National Australia Bank’s Tapas Strickland.

Analysts said the decision could deal a blow to markets, which had rallied in recent weeks on optimism that the recent banking sector turmoil could force the US Federal Reserve to end its rate hike drive sooner than expected.

“For equity investors, this could be a rude awakening, as markets imply a Goldilocks outlook of reduced discount rates but no recession,” said Lazard Limited Company Ronald Temple.

“The OPEC+ production cut is another reminder that the inflation genie is not back in the bottle.” Still, the mood on Asian trading floors was upbeat, with most markets tracking a strong rally on Wall Street in response to news that US and eurozone price rises had slowed further.

The Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred measure of inflation, slowed to an annual rate of 5 per cent in February from 5.3 per cent in January.

Meanwhile, eurozone prices rose 6.9 per cent in March, well down from 8.5 per cent in February, beating expectations as energy prices eased.

In early trade, Shanghai, Sydney, Singapore, Manila and Jakarta all rose, though Hong Kong dipped after last week’s rally. Seoul and Wellington also slipped.

Tokyo rose despite the Bank of Japan’s closely watched Tankan survey showing confidence among the country’s largest manufacturers falling to its lowest level in more than two years.

However, US futures dipped as Treasury yields climbed on bets of further monetary tightening by the Fed.

Russia says oil cuts ‘in interests’ of energy markets

Meanwhile, Russia said oil output cuts are “in the interests” of global markets. “It is in the interests of global energy markets for world oil prices to remain at a good level,” Kremlin spokesman Dmitry Peskov told reporters.

“Whether other countries are happy with this or not is their business,” he added. The decision could anger the United States, which had already criticised the OPEC+ oil cartel, led by Saudi Arabia and Russia, over a previous cut in production last year.

Riyadh and other major oil producers announced Sunday a production cut of more than one million barrels per day, calling it a “precautionary” move aimed at stabilising the market.

Russia said it would extend until the end of the year its own voluntary production cut of 500,000 barrels per day, a measure seen by experts as a way of making prices go up and counteracting the effect of international sanctions.

Russia’s deputy prime minister in charge of energy, Alexander Novak, said the measure was justified by the “high volatility” and “uncertainty” on the oil market. “The predictability of the global oil market is a key element to ensure energy security,” he said in a statement.

Oil prices shot up on Monday, with both main crude contracts jumping around eight percent at one point.