Oil prices jumped Tuesday after Russia and Saudi Arabia extended cuts to supplies, while stocks slid on worries this could fuel inflation and hobble growth.

The dollar strengthened as bond yields rose, following some recent weakness as traders expect the Federal Reserve to pause its hiking of interest rates.

The price of the main international oil contract, Brent crude, hit $90 per barrel for the first time this year, after the announcements by Russia and Saudi Arabia.

Russia it would extend its oil export cuts of 300,000 barrels per day until the end of the year, while Saudi Arabia said it would maintain its production cut of 1 million barrels per day to the end of the year as well.

"This was flagged last week to some extent but crude is fetching strong bids on the announcement," said Finalto analyst Neil Wilson.

The price of Brent crude rose more than 1.5 percent to soar past $90 per barrel for the first time since November last year, rising as high as $90.83.

The main US contract, WTI, jumped more than two percent to reach $87.67 per barrel.

Oil prices have been creeping up as Russia and Saudi Arabia reduce supplies in addition to cuts agreed by OPEC and allied oil exporting nations, while demand so far has remained buoyant.

However, the increase in prices has sparked concern that they will soon begin to hit demand as many countries are struggling to maintain growth due to high-interest rates meant to bring down high inflation.

Market analyst Michael Hewson noted that higher oil prices will complicate efforts by central banks to lower inflation.

"We're already seeing the impact of this trend in higher input prices in today's PMI numbers pointing to the prospect that inflation is likely to remain sticky in the weeks and months ahead," he said.

A slew of updated PMI surveys on business activity were released on Tuesday, with the eurozone survey showing input cost inflation accelerating for the first time in nearly a year.

The eurozone services fell into a contraction to hit a 30-month low, while the overall survey showed activity contracting to a 33-month low.

Both Frankfurt and Paris stocks closed down, as did London.

A PMI survey showing China's services sector grew last month at a much slower pace than expected dampened sentiment in Asian trading.

The Caixin Services PMI came in at 51.8 in August, down from 54.1 in July.

While the figure above 50 still indicates an expansion, it suggests growth is decelerating in the world's largest economy.

"The recovery in China's services sector, or even consumption, is ongoing but not as strong as people had expected," said Larry Hu of Macquarie Group.

"People are not very optimistic about their future income due to the economic woes, and so they tend to save more."

Hong Kong's stock index closed down more than two percent — though struggling mainland developers including Evergrande and Sunac soared.

Shanghai was also well in the red.

Wall Street's main stock indices were down in late morning trading.