Oil prices settled down 1per cent on Monday as worries about a slowing global economy and possible U.S. interest-rate hikes outweighed supply cuts announced for August by top exporters Saudi Arabia and Russia. Brent crude futures settled down 1 per cent, or 76 cents, at $74.65 a barrel while U.S. West Texas Intermediate crude settled down 1.2 per cent, or 85 cents, to $69.79. Saudi Arabia on Monday said it would extend its voluntary cut of one million barrels per day (bpd) for another month to include August, the state news agency said.

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But prices moved lower after business surveys showed global factory activity slumped in June as sluggish demand in China and in Europe clouded the outlook for exporters.

Fears of a further economic slowdown denting fuel demand grew on Friday as U.S. inflation continued to outpace the central bank's 2per cent target, stoking fears of more rate hikes.

Higher U.S. interest rates could strengthen the dollar, making oil more expensive for buyers holding other currencies.

"Oil is facing serious economic headwinds and the market is trying to make sense of what additional crude cuts mean in that context," said John Kilduff, partner at Again Capital LLC in New York.

Russia, seeking to tighten global crude supplies and boost prices in concert with Saudi Arabia, will reduce oil exports by 500,000 bpd in August, Deputy Prime Minister Alexander Novak said.

The cuts amount to 1.5per cent of global supply and bring the total pledged by OPEC+ oil producers to 5.16 million bpd.

Riyadh and Moscow have been trying to prop up prices. Brent has dropped from $113 a barrel a year ago, hit by concerns of an economic slowdown and ample supplies.

"Investors are turning upbeat as the second half of the year kicks off. They expect tighter oil balance and buoyant equities also suggest that recession will be avoided, albeit probably narrowly," said PVM analyst Tamas Varga.