Oil dropped as the dollar strengthened ahead of central-bank meetings this week that are expected to lead to further monetary tightening, heightening concern among traders that economies could weaken.

Brent crude fell almost 2.6% to below $90 a barrel, with markets in the U.K. and Japan shut for holidays. The dollar is trading near a record, making commodities priced in the currency more expensive. A raft of central-bank decisions from the US to Europe and Asia are scheduled as monetary policy makers try to tame inflation.

Those bank interventions could come at the cost of economic growth. Concerns that a global slowdown will sap energy demand have put oil on track for its first quarterly decline in more than two years.

"Aggressive rate hikes will eventually weigh on growth," said Giovanni Staunovo, a commodity analyst at UBS Group AG. "The general drivers at the moment are risk off and a stronger dollar."

High energy prices are threatening to pull Europe into a painful recession, with governments in the region taking steps to shore up energy supplies. Germany on Friday seized the local unit of Russia's Rosneft PJSC, as Berlin moves to take sweeping control of its energy industry and sever decades of deep dependence on Moscow for fuel.

Global demand for oil slumped in July, dropping by 1.1 million barrels a day in a period which usually sees oil usage creeping up, according to the Riyadh-based International Energy Forum. China's crude imports and use of oil in refineries fell year-on-year, according to data from the Joint Organizations Data Initiative, to which the IEF contributes.

The gap between prompt Brent crude futures and the second month contract, a measure of the market's reading of near-term supply and demand tightness, remains in a bullish backwardation pattern. The spread was at $1.31 a barrel, compared with $1.07 a week ago.

OPEC member the United Arab Emirates raised the prospect of being able to bring more oil to market over the next several years. Abu Dhabi National Oil Co., which pumps almost all the UAE's oil, wants to be able to produce 5 million barrels of crude a day by 2025, according to people familiar with the matter. That's sooner than a previously disclosed aim of 2030.

Crude rallied earlier in the session after the reopening of Chengdu in China, the biggest city to shut since Shanghai's bruising two-month lockdown earlier this year. Still, weak economic activity in the major oil-consuming nation is weighing on prices, Staunovo of UBS said.

Iran's President Ebrahim Raisi said he needed guarantees that the U.S. won't walk away again from a nuclear deal as a condition for the Middle Eastern country entering into an accord. A new agreement would lead to the return of Iranian crude to a tight oil market, though negotiators remain at loggerheads.

Meanwhile, loading and export operations at Iraq's Basra oil terminal returned to normal after technical and engineering teams finished dealing with a spill, state-run Basra Oil Co. said over the weekend. The incident on Thursday had forced a halt in exports from the facility.

Yongchang Chin and Anthony Di Paola report for Bloomberg News.

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