Oil prices fell about 2 percent towards its 11-year low on Tuesday, as traders shrugged off growing tensions between two of the world's biggest oil producers, and focused instead on a stronger U.S. dollar and swelling U.S. crude inventories.
The U.S. dollar hit a one-month high against a basket of currencies, rising nearly 0.6 percent by midday as traders sought safety over concerns about sluggish global growth and losses in the Chinese stock market
An expected build in crude inventories at Cushing, Oklahoma, the delivery point of the NYMEX futures contract, also weighed on prices. The American Petroleum Institute will release its inventory data at 4:30 p.m. EDT (2130 GMT).
Global marker Brent crude prices were down 80 cents at $36.42 a barrel. Prices hit an 11-year low of $35.98 a barrel just before Christmas, capping a year where the benchmark's value dropped by more than a third.
U.S. West Texas Intermediate (WTI) crude settled down 79 cents, or 2.15 percent, at $35.97 a barrel.