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Brent crude futures fell $2.32, or 2.2%, to $104.78 a barrel by
0953 GMT, while U.S. West Texas Intermediate crude was at
$101.46 a barrel, down $2.63, or 2.5%. Both contracts fell by
about 3% earlier.
The euro sank on Tuesday, trading at near parity with the
dollar, and stock markets fell as the prospect of further
central bank tightening and worries about the health of
economies worldwide unnerved investors.
As oil in priced in dollars, a stronger greenback usually weighs
on oil prices because it makes the commodity more expensive for
holders of other currencies.
"In the West, the combination of high energy prices and rising
interest rates is fuelling concerns about a recession that would
have a serious impact on oil demand," Commerzbank said.
Renewed COVID-19 mobility curbs in China were also weighing on
prices, the bank said.
Multiple Chinese cities are adopting fresh COVID-19 curbs, from
business halts to lockdowns, to rein in new infections as the
highly infectious BA.5.2.1 subvariant appears in the country.
U.S. President Joe Biden would make the case for greater oil
production from OPEC when he meets Gulf leaders in Saudi Arabia
this week, White House National Security Adviser Jake Sullivan
said on Monday.
"Little hope is being assigned to Biden's visit to Saudi Arabia
unlocking more production from them or the UAE," said Jeffrey
Halley OANDA's senior market analyst for Asia Pacific said in a
note.
Spare capacity within the Organization of the Petroleum
Exporting Countries is running low, with most of the producers
pumping at maximum capacity.
U.S. Treasury Secretary Janet Yellen is in Asia to discuss ways
of further strengthening sanctions on Moscow, including setting
a price cap on Russian oil to limit the country's profits and
help lower energy prices.
International Energy Agency Executive Director Fatih Birol said
any price caps on Russian oil should include refined products.
"My hope is that the proposal, which is important to minimise
the effect on the economies around the world, gets buy-in from
several countries," Birol told Reuters in an interview on the
sidelines of the Sydney Energy Forum.
Western sanctions on Russia over the war in Ukraine, which
Russia calls a "special military operation", have disrupted
trade flows for crude and fuel.
(Additional reporting by Florence Tan in Singapore and Emily
Chow in Kuala Lumpur; editing by David Evans)
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