Brent, the international oil benchmark, fell below $85 a barrel for the first time since January amid mounting concerns about a global economic slowdown.
Central banks around the world have hiked interest rates to quash inflation, further crimping oil demand, reports Bloomberg.
At the same time, Russia's invasion of Ukraine and China's Covid-19 lockdowns have battered the global outlook for supply and demand.
Brent fell as low as $84.83 a barrel by 7:19 am in London. Brent's dip came after West Texas Intermediate crude posted its longest stretch of weekly losses this year.
Both benchmarks are heading for quarterly declines, with low liquidity fueling massive price swings.
The dollar index that measures the greenback against a basket of major currencies climbed to a 20-year high on Monday, reports Reuters.
A stronger greenback tends to curtail demand for dollar-denominated oil since buyers using other currencies must spend more to buy crude.
"A backdrop of global monetary policy tightening by the key central banks to quell elevated inflation, and a splendid run-up in the greenback towards more than two-decade highs has raised concerns about an economic slowdown and is acting as a key headwind for crude prices," said Sugandha Sachdeva, vice president of commodity research at Religare Broking.
Sachdeva expects WTI prices could find a floor at $75 a barrel, while for Brent $80 will act as a cushion.
The disruptions in the oil market from the Russia-Ukraine war, with European Union sanctions banning Russian crude set to start in December, has lent some support to prices.
The chief executive officer of energy trader Vitol, Russell Hardy, said that fuel shipments are being affected with Russian oil products expected to flow to Asia and the Middle East while supplies from their go to Europe.
Additionally, Hardy told an oil conference in Singapore that more than a million barrels per day (bpd) of US crude is expected to go to Europe to fill the gap in Russian supplies.
The head of Colombian state energy company Ecopetrol said at the same conference that it has been selling more oil to Europe, replacing Russian supplies, while it sees growing competition for market share in Asia.
Attention is turning to what the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together called OPEC+, may do when they meet on 5 October, after agreeing to cut output modestly at their last meeting.
But, since OPEC+ is producing well below its targeted output, any announced cut may not have much impact on supply.
Data last week showed OPEC+ missed its target by 3.58 million bpd in August, a bigger shortfall than in July.