Oil prices hit a five-month low on Monday following fresh virus-induced lockdowns.
More economies have tightened social restrictions including the UK, France and Germany as they battle rising infection rates.
The fear is that the new lockdown measures will further dent economic growth and demand for oil will slump.
Commodities and share markets are also on edge with the US election looming this week.
In Asia trading hours, the price of Brent crude fell to a low of $35.74 per barrel, a level not seen since late May. It later recovered somewhat in London trading, hitting $37.86 by mid-morning.
The price of Brent, the main benchmark for oil prices, is down 45% from the start of the year. The virus-induced slump has weighed heavily on energy companies, with BP and Shell announcing thousands of job cuts this year.
BP plans to cut 10,000 jobs after a slump in demand while Royal Dutch Shell has said it expects to cut 7,000 to 9,000 jobs.
The price of US crude oil has also been hit hard, falling 7% on Monday to a low of $33.64 a barrel before recovering slightly.
Fears of a tightly contested presidential election this week and the absence of continued US fiscal stimulus have led to a gloomy economic outlook.
“Whichever way you look at it, this coming week will be huge for US and global markets,” said Simon Ballard, chief economist at First Abu Dhabi Bank.
“We see the potential for a sharp rise in volatility around these events and all in the context of a still deteriorating Covid-19 situation across much of the US, Europe and elsewhere.”
China remains the most upbeat market for economic growth this year.
The world’s top crude oil importer said on Monday it would raise its quota for 2021 by 20% for non-state owned companies.
This came after activity in China’s factory sector accelerated at the fastest pace in nearly a decade in October as domestic demand surged.
This was according to the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) – a private survey which focuses on smaller to medium-sized companies.
Last month, China continued its recovery from the pandemic with strong economic growth during the third quarter, according to its official figures.
The world’s second-biggest economy reported growth of 4.9% between July and September, compared to the same quarter last year.