Brent crude futures dropped $2.61, or 3.47%, to settle at $72.65 a barrel, while West Texas Intermediate (WTI) fell $2.46 in synchronized selling.
The decline in energy prices coincides with a broader shift in currency markets, where the US dollar index has climbed to its highest level in 13 months.
The dollar’s surge is driven by a wave of buying interest as traders rapidly adjust their expectations for Federal Reserve policy.
This repricing of rate expectations has strengthened the greenback against most major currencies, creating headwinds for dollar-denominated commodities like oil.
The inverse relationship between the dollar and crude prices is evident in today’s session, with energy markets absorbing the pressure from a firmer currency backdrop.
This move marks a significant shift in sentiment, moving away from previous dovish assumptions regarding the Fed’s trajectory.