The West Texas Intermediate for December delivery lost 1.83 U.S. dollars, or 2 percent, to settle at 88.17 dollars a barrel on the New York Mercantile Exchange. Brent crude for January delivery dropped 1.49 dollars, or nearly 1.6 percent, to settle at 94.67 dollars a barrel on the London ICE Futures Exchange.
The U.S. central bank on Wednesday raised its benchmark rates by 75 basis points for the fourth consecutive meeting, given that inflation is still running at multi-decade highs. Fed Chair Jerome Powell said it was "very premature" to think about pausing rate hikes.
Traders grew fearful that the Fed's aggressive rate-hiking campaign will tip the economy into a recession, hurting demand for energy.
The dollar index, which measures the greenback against six major peers, surged 1.4 percent to 112.9260 in late trading on Thursday, driven by the Fed's hawkish stance. The price of oil is normally inversely related to the price of the U.S. dollar.
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