Brent crude fell below $98 a barrel heading for its worst week in six, as concerns over weak demand outweighed geopolitical worries in the Middle East and Ukraine.
Weaker oil demand in China and Europe had caused growth in global oil demand to soften at a remarkable pace, the International Energy Agency said in its monthly report.
The West’s energy watchdog cut its demand growth projections by 150,000 barrels per day to 900,000 bpd for 2014 and by 100,000 bpd to 1.2 million bpd in 2015.
Brent is down 3 percent, headed for its biggest weekly loss since August. The October contract fell 28 cents to $97.80 after a four-cent gain in the previous session snapped a five-day losing streak.
Brent bounced from a two-year low after Russia warned the US that air strikes in Syria against Islamist militants would be an act of aggression without a UN security mandate. This raised the spectre of a new confrontation between Moscow and the West.
The EU will implement tougher sanctions against Russia although they could be removed if Moscow abides by a ceasefire between Kiev and pro-Russian separatists. However, Russia called the new measures anti-peace.
The US will also release details later of its own new sanctions against Russia which are expected to target Sberbank, Russia’s largest bank, and further limit Russian banks’ access to US capital.
The market is also keeping an eye on Iran which faces a “difficult road” to reach an agreement with six world powers over Tehran’s nuclear programme by a late November deadline.