WTI crude dived more than five percent Tuesday to fall back below $100 a barrel as concerns about a possible slowdown in China's economy lead investors to rethink their expectations for demand.
The contract shed 5.7 percent to $97.13, while Brent was off six percent at $100.54.
The steep losses come just over a week after they both soared to near 14-year highs as Vladimir Putin's war in Ukraine fanned worries about supplies as the United States and Britain banned of imports of crude from Russia, the world's third biggest producer of the commodity.
China announced Sunday it will lockdown the tech hub of Shenzhen, a city of 17 million people and one of the country's biggest cities, owing to the fast-spreading Omicron, which has seen infections surge across the country.
With China the world's biggest importer of crude, the move has shot a hole through expectations for demand, while a flicker of optimism over Russia-Ukraine peace talks were also weighing on the market.
"Sentiment in commodity markets remains driven by headlines, with talks between Russia and Ukraine raising hopes that supply disruptions will be minimal," Daniel Hynes, at Australia & New Zealand Banking Group, said.
"This should see oil prices come under increasing pressure. However, it doesn't reflect the fundamental picture, with Russian oil becoming increasingly isolated."
