The West Texas Intermediate for October delivery shed 4.94 U.S. dollars, or 5.7 percent, to settle at 81.94 dollars a barrel on the New York Mercantile Exchange. Brent crude for November delivery decreased 4.83 dollars, or 5.2 percent, to settle at 88 dollars a barrel on the London ICE Futures Exchange.
Both the U.S. and the global crude benchmarks settled at their lowest levels since January, according to Dow Jones Market Data.
The pullback came as traders grew fearful that major central banks' aggressive policy tightening to curb inflation would lead to a recession, dampening demand for energy.
The European Central bank is widely expected to approve a big rate hike when it meets on Thursday. Meanwhile, recent U.S. economic data reinforced expectations that the Federal Reserve will remain hawkish.
Investors also looked to data on U.S. crude stockpiles as the Energy Information Administration is set to release its weekly petroleum status report on Thursday. Analysts polled by S&P Global Commodity Insights forecast U.S. crude inventories to show a fall of 1.8 million barrels for the week ending Sept. 2.
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