Oil prices edged slightly lower on Friday as worries about global economic growth and uncertainty weighed on markets following numerous interest rate hikes around the world this week.
Brent crude futures fell 83 cents, or 0.8 per cent, to $118.98 a barrel, while US West Texas Intermediate (WTI) crude futures fell to $116.79 a barrel, down 80 cents, or 0.7 per cent.
If losses hold through the day, Brent crude futures would post their first weekly dip in five weeks, while U.S. crude futures would see their first dip in eight weeks.
Central banks across Europe raised interest rates on Thursday, some by amounts that shocked markets, and hinted at even higher borrowing costs to come to tame soaring inflation that is eroding savings and squeezing corporate profits.
Argentina's central bank raised its benchmark interest rate by the most in three years on Thursday, as the South American country fights inflation running at over 60 per cent.
Those moves came on the heels of a 75 basis point rate hike this week by the US Federal Reserve, the highest since 1994.
Federal Reserve policymakers are less confident than at any time since the height of the pandemic about what will happen with the economy, data showed.
US stock indexes also closed sharply lower on Thursday in a broad sell-off as recession fears grew.
The International Energy Agency on Wednesday also warned that sky-high oil prices and weakening economic forecasts dimmed the future demand outlook.
Investors also remained focused on tight supplies after the United States announced new sanctions on Iran.
"A rebound in China demand sentiment, and expected seasonal ramp-up in OECD oil demand into August leaves price risk to the upside through 3Q 2022," said Baden Moore, head of commodities research at the National Australia Bank.