Brent crude fell $1.19, or 1.1%, to $104.75 a barrel by 0607 GMT after slipping as low as $103.19.
US West Texas Intermediate Crude fell $1.07, or 1%, to $102.02 a barrel after hitting an intraday low of $100.44.
On Monday, both benchmarks posted their largest daily percentage declines since March, falling 5% to 6%.
The declines mirrored trends in global financial markets as investors dumped riskier assets on concerns about interest rate hikes and the resulting impact on economic growth.
The dollar held near 20-year highs, making oil more expensive for holders of other currencies.
“China’s Covid situation, rising interest rates and mounting recession risks are not helping risky assets,” said Warren Patterson, head of commodity research at ING.
Recent data showed that China’s export growth had slowed to single digits, the weakest in nearly two years, as the country extended lockdown measures to curb the spread of Covid-19.
Oil prices were boosted last week after the European Commission proposed a phased embargo on Russian oil. However, approval was delayed due to requests for exceptions and concessions from Eastern European members.
A new version being drafted is likely to lift a ban on EU tankers carrying Russian oil after pressure from Greece, Cyprus and Malta, an EU source said.
“Clearly (EU) members are fighting to reach an agreement, which suggests that we could see further watering down of the proposed package,” Patterson said.
Financial markets are also heeding concerns that some European economies could struggle if Russian oil imports were further restricted or if Russia retaliated by cutting off gas supplies.
German officials are quietly preparing for a sudden halt to Russian gas supplies, Reuters reported. An emergency package could include taking control of critical companies.
A halt to Russian gas supplies to Germany would trigger a deep recession and cost half a million jobs, a senior economist said in an interview published on Tuesday.
Hungary has also reiterated its position that it will not accept a new round of proposed sanctions against Russia until its concerns are allayed.
In the United States, crude oil, distillate and gasoline inventories are likely to have fallen last week, a preliminary Reuters poll of weekly data showed on Monday.
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