Brent crude has slumped to the lowest level since 2004 as oil producing countries from the Middle East to Russia and Iran flood the world with increased supplies.
The price of oil due for delivery in February fell 75 cents, from its closing price last Friday, to $36.13 per barrel in early trading on the London exchange.
The weak start to trading brings oil's losses for the year to date to 46pc, and a far cry from the $115 per barrel in June last year.
London equity markets are set to open lower as the heavy weighting towards commodities-focused companies, such as Royal Dutch Shell and BP, will hit trading.
The price of oil has faced further pressure after an Opec meeting three weeks ago, when the cartel of oil producers decided not to cut production.
Saudi Arabia is determined to push the oil market to its limits in order to defend its market share, which has come under threat from increased production from Russia, Iran and, more recently, US shale.
The US last week exacerbated the situation when Congress reached a landmark decision to end a four-decade ban on most exports of crude oil.
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