Global crude markets have been whiplashed since Russia invaded Ukraine on February 24, with Brent and US futures trading above $100 for most of that duration, but benchmark crude prices fell in the latest trading week.
The bias is still tilted to the upside on supply disruptions because of Western sanctions on Russia for its attack on Ukraine.
Global crude futures declined in the latest trading week on demand concerns driven by the renewed surge in COVID-19 cases in China and the following strict restriction imposed there.
The international benchmark, Brent crude, fell over 1.5 per cent on Friday to about $107 per barrel. For the week, Brent dropped 4.5 per cent after a near 9 per cent gain last week and about a 13 per cent drop in the two prior weeks.
If that weakening trend continues, April will be this year's first month in the negative for Brent.
US crude benchmark West Texas Intermediate, or WTI, also closed out over 1.5 per cent lower at nearly $103 a barrel. Like Brent, WTI too showed a drop of 4.5 per cent for the week and similar volatility to the global benchmark in three previous weeks.
While demand worries from one of the world's largest consumer of oil, China, has weighed on investors' sentiment, the path of least resistance for crude oil is up, driven by the prospect of more sanctions on Moscow as the Ukraine crisis intensifies further.
"The risks are certainly more tilted to the upside, given the war in Ukraine and a potential embargo on Russian exports, but lockdowns in China and the risk of a Fed-driven economic slowdown are also significant," Craig Erlam, head of research for Europe at online trading platform OANDA, told ANI.
The dollar's surge in recent weeks has also weighed on oil prices, led by the aggressive posturing by Federal Reserve policymakers for more significant and faster rate hikes to fight runaway inflation.
A Fed policymaker even suggested a 75 basis points hike at the May meeting after the central bank lifted rates by 25 basis points at its previous meeting.
"Some fear that a 50 basis point rate increase will be the first of many and could slow down the economy and the oil demand," wrote Phil Flynn, energy analyst at Price Futures Group in Chicago, in a commentary note.
It is not just a tightening cycle upsetting traders overnight but also the pricing-in of a 50-basis point interest rate increase by September by the European Central Bank. The Bank of Japan, on the other hand, wants to remain dovish but worries that the course of the US and Europe could force them to change course," he added.