Equity markets moved modestly higher on Monday after OPEC+ announced a surprise production cut. Starting in May, the cut is worth more than 1 million barrels per day and will tilt the supply-demand balance firmly in favor of higher prices. The news sent the price of WTI up by more than 6%, which was sustained through the end of the session. Analysts are already discussing $100 oil, which could be a cautious estimate given the coming travel season.

The real takeaway from the oil news is inflation. Another spike in oil prices will be felt at all levels of the economy and spark another round of negative feedback loops. In this scenario, inflation will not only accelerate but could also reach new highs. This will leave the FOMC no choice but to continue hiking interest rates and adding pressure to an economy already showing signs of distress.