The Bank of Japan raised its key interest rate by 0.25 percentage points to 1.25%. This move marks the central bank's first interest rate hike in decades.
Officials signaled that future monetary policy will remain gradual and accommodative. This dovish guidance triggered a sharp decline in the Japanese yen.
The falling yen boosted the U.S. dollar index. A stronger dollar increases the cost of oil for buyers using other currencies.
WTI crude futures fell 0.5% to approximately $79.40 per barrel following the announcement.