Concerns that a global downturn will reduce demand in Europe and the US at the same time that China’s Covid Zero campaign affects consumption caused oil to decline to its lowest level since January.

After erasing a gain brought on by the Organization of Petroleum Exporting Countries and its allies’ decision to reduce output on Monday, West Texas Intermediate fell below $86 per barrel. Saudi Arabia reduced pricing for customers in Asia and Europe for supplies due in the next month, reflecting the downturn.

According to a Bloomberg gauge, the dollar’s run to an all-time high on Wednesday acted as an additional drag on commodities, particularly crude. Oil costs more for customers outside of the US due to the strengthening of the dollar.

With a shaky start to September, crude has continued its three-month losing trend, which was the worst stretch in more than two years. Investors are worried that economies could fall into recession due to central banks raising interest rates to combat inflation. Saudi Arabia, the organization’s leader, declared this week that it is prepared to aggressively regulate the market, opening the door to additional supply reductions.

Strict anti-virus restrictions in China, the largest oil importer in the world, are reducing demand. Chengdu in Sichuan has 21 million residents and has prolonged a stay-at-home order. In contrast, Beijing, the capital, has increased efforts after learning of additional incidents, and Shenzhen, the southern technological hub, continues to be subject to mobility restrictions.

Time spreads on the heavily followed oil market have been erratic. The difference between Brent’s closest two contracts, or the “prompt spread,” was 85 cents per barrel in a backwardation, down from $1.34 at the beginning of the week.