The price of Brent crude oil has fallen to a new five-and-a-half year low of $52.27 per barrel, its lowest level since May 2009.
Brent lost as much as 3% earlier on Tuesday to $51.23 before recovering. It follows Monday’s 6% plunge in prices. The fall appeared to have been prompted by Saudi Arabia cutting prices to Europe.
At the same time, the kingdom, Opec’s largest oil-producing nation, raised them for Asian customers.
Some analysts said the price cuts reflected Saudi Arabia’s deepening desire to defend its market share in Europe.
US oil fell further on Tuesday to $48.54, having fallen below the symbolic threshold of $50 a barrel for the first time since April 2009 on Monday.
The prices of both Brent crude and US oil, known as West Texas Intermediate crude, have now fallen by more than 50% since mid-2014.
Investors are worried that a combination of global oversupply and weak oil demand could cause prices to tumble further.
US oil production has soared recently, as fracking – or the process of extracting oil from shale rock by injecting fluids into the ground – has revolutionised oil production in the country, transforming US states such as North Dakota and Pennsylvania in the process.
However, the increase in production has come just as demand for oil in economies across the world from Europe to China – the world’s second-largest consumer of oil – has slowed.
Recent data also showed that Russia’s 2014 oil output hit a post-Soviet era high and exports from Iraq, Opec’s second-largest producer, reached their highest since 1980.