The West Texas Intermediate for October delivery lost 5.37 U.S. dollars, or 5.5 percent, to settle at 91.64 dollars a barrel on the New York Mercantile Exchange. Brent crude for October delivery decreased 5.78 dollars, or 5.5 percent, to close at 99.31 dollars a barrel on the London ICE Futures Exchange.
The sell-off came as traders worried that major central banks' aggressive policy tightening to tame inflation could push up recession risks and subdue energy demand.
Data released Tuesday showed that Germany's annual inflation rate rose to a record high of 7.9 percent in August, bolstering calls for a big interest-rate hike when the European Central Bank meets next week.
In a highly-anticipated speech last Friday, U.S. Federal Reserve Chairman Jerome Powell reiterated a pledge to forcefully combat inflation, while warning that the fight would cause "some pain" to U.S. households and businesses.
Oil participants also awaited data on U.S. fuel stockpiles as the Energy Information Administration is set to release its weekly petroleum status report on Wednesday. Analysts surveyed by S&P Global Commodity Insights expect U.S. crude inventories to show a fall of 1.9 million barrels for the week ending Aug. 26.
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