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London - Global oil prices tanked on Friday close to seven-year lows on oversupply woes, sparking a fresh wave of selling across European stock markets as panicked investors fled the energy sector.
Crude, which has slumped since OPEC left its oil output at a record high level last week, took another tumble after the International Energy Agency (IEA) said oversupply would persist until late 2016.
In response, Brent crude for January collapsed to $38.90 per barrel - a level last seen on December 31, 2008, during the global financial crisis.
US benchmark West Texas Intermediate (WTI) for delivery in January dived to $36.12 - last witnessed in February 2009.
"Comments from the IEA have ... seen both WTI and Brent fall aggressively, after they (indicated) that the unrelenting supply would see oil prices lower into the new year," said analyst James Hughes at trading firm GKFX.
Traders were also positioning themselves before the weekend and next Wednesday's expected interest rate hike from the US Federal Reserve.
The prospect of higher interest rates boosts the greenback, which in turn makes dollar-priced crude more expensive for buyers using weaker currencies. That tends to weigh on oil demand and pull prices lower.
"Oil prices have fallen heavily again this morning as the commodity rout continues to dominate the week," Hughes told AFP.
"Prices have tumbled yet again as many investors try and position themselves ahead of the weekend, and also next week's key Fed decision."
Oil has collapsed by more than 10% since the 13-nation Organization of the Petroleum Exporting Countries decided against cutting output despite plunging prices, weak global demand and the stubborn supply glut.
That has sent shockwaves across world equity markets because low oil prices slash profits for energy majors like BP, Total and Royal Dutch Shell.
Nearing midday on Friday, the London stock market shed 1.0%, Frankfurt sank 1.5% and Paris was down 1.2% in value.
BP's share price slid almost 1.5% to 345.80 pence and Shell's 'B' shares dropped 2.31% to 1 498 pence in London.
French giant Total saw its stock sink 1.57% to €42.41 in Paris.
Most Asia markets also sank again on Friday at the end of a painful week for global equities defined by a commodities rout that analysts warn could continue for some time.
The Fed is expected next week to deliver its first interest rate increase in nine years.
"It's difficult for shares to move much ahead of the Federal Reserve meeting," Hitoshi Asaoka, a senior strategist at Mizuho Trust & Banking in Tokyo told Bloomberg News.
"Oil prices haven't stabilised yet so we can easily enter a wait-and-see mood. I expect the market to continue to be unstable."
With the global economy struggling, China's growth subdued and the dollar tipped to strengthen further, oil is expected to remain beaten down until possibly 2017.
Prices were hurt further by OPEC's announcement on Thursday that its collective production rose in November to its highest level in three and a half years.
The figures are "reinforcing consternation that the global oil market is going to remain oversupplied for a longer time", said Bernard Aw, market strategist at IG Markets in Singapore.
Shares in Hong Kong sank 1.1% - a seventh-successive loss - with CNOOC and PetroChina leading energy firms lower.
On other markets Shanghai slipped 0.9%, Sydney was 0.2% lower and Seoul sank 0.2%. However, bargain-buying and a weaker yen helped Tokyo rally.
