Oil prices slumped US$7 a barrel, the steepest decline in about a month, as fears mounted that fuel demand could weaken as key central banks raised interest rates to combat high inflation.
Brent crude, the international benchmark, fell from just above US$105 to below US$98 overnight, before mounting a smaller rally this morning.
West Texas Intermediate, the US measure, fell from US$97 a barrel to below US$91 at one point.
The reason for the fall was attributed to fears of a global recession as central banks hike interest rates aggressively.
However, some analysts pointed to Iran and Irag.
Rabobank suggested the slide in crude prices "appeared to be the function of speculation that Iran will shortly be signing a new nuclear deal with the US/ Iraqi production was not being impacted by violence in the country".
Deutsche Bank noted that "a US State Department spokesperson later denied the rumours, and we’ve already heard from OPEC+ that any supply increase from Iran would be offset by supply cuts among the cartel. So if oil prices stay around these levels, perhaps the market is pricing in more global demand slowdown than unmitigated supply expansion."
Many top economies are experiencing double-digit inflation, which could lead to more aggressive interest rate increases, slowing economic growth and fuel demand.
Federal Reserve's chairman Jerome Powell said raising rates will "bring some pain to households and businesses."