Oil prices dropped 6% on the week and stabilized for the third time in four days as US rate hikes and recession fears outweighed producer organization OPEC's recent output adjustment to support the market.

New York-traded West Texas Intermediate, or WTI, crude closed down $1.87, or 2.4%, at $77.29 a barrel, after a three-week low at $76.97.

London-traded Brent crude, the global benchmark for oil, finished the day down $2.02, or 2.4%, at $81.10 per barrel, after a three-week low at $80.78.

Crude prices dropped by 2% or more for the third time in four days, resulting in a 6% loss for the week as oil markets were pressured by fears of a recession later this year and the eleventh US rate rise since the epidemic.

Before the selloff, crude prices rose to their highest levels since November, with WTI surging to over $83 and Brent to over $87, supported by deeper production cuts announced by OPEC+, the grouping of the 13-member Organization of Petroleum Exporting Countries, with 10 independent oil producers, including Russia.

The rise in the dollar and US Treasury rates from their one-year lows last week also contributed to this week's drop in oil prices. Before both turned negative on Thursday, the dollar had been on the rise and yields had been getting close to their top from the prior session.

In general, a stronger dollar reduces demand for items priced in the currency abroad. Increased US bond rates also tend to reduce international capital inflows while decreasing the attraction of risky assets.

Read next: US set for recession next year, economists predict

Anticipations of higher oil prices have been hindered by persistent rumors that the Federal Reserve would likely hike interest rates by another quarter point at its policymakers' meeting in May.

This week's tumble in oil prices came despite the release of positive US inventory data. According to the Energy Information Administration's (EIA) Weekly Petroleum Status Report, refineries produced more gasoline for commercial vehicles last week, causing crude oil stocks in the United States to decline at their fastest rate in three weeks.

In an effort to fill the vacuum left by OPEC+'s announcement of greater production cutbacks to support a market that hit 15-month lows in March, WTI was also down, potentially for technical reasons.

"Now it's a question of whether that gap will be filled, with the high from the Friday before falling just shy of $76 in WTI and $78 in Brent," said Craig Erlam, an analyst at online trading platform OANDA, Sputnik reported.

"That would require another drop of around 3% but only take the price back to the middle of the range oil was trading in for months prior to the SVB collapse."

Saudi energy minister announced today that Saudi Arabia will be cutting down oil production at a rate of 500,000 barrels per day until the end of 2023, for the sake of stabilizing the oil market.

Russia reciprocated the decision and announced a downplay of oil production at the same rate. Iraq, UAE, Algeria, Kuwait, and Oman will be reportedly following suit to voluntarily cut down on oil production.

According to Deputy Prime Minister Alexander Novak, Russia will extend its 500,000 barrels per day (bpd) oil output cut until the end of the year.

Within minutes of Saudi Arabia, Kuwait, Oman, Iraq, and the United Arab Emirates' declarations, Russia made the announcement.

The head of investment company Pickering Energy Partners stated on Sunday that the unexpected 1.15 million barrel per day output cut by OPEC producers could increase world oil prices by $10 per barrel.

Read more: Oil prices fell sharply after reports of UAE mulling OPEC withdrawal

Back in November, citing economic challenges such as high inflation and interest rate increases, OPEC cut its forecast for 2022 global oil demand growth - cutting down next year’s figure as well. 

Moreover, according to Federal Reserve Bank of San Francisco President Mary Daly, the US central bank may no longer need to hike interest rates on a monthly basis because inflation in the US looks to be moderating.

During a public event, Daly stated that "we don't keep raising interest rates until we get to 2%," alluding to the Fed's long-term inflation objective of 2% vs the current rate of 5%.