Oil prices fell back below the US$30 threshold on Tuesday, putting the skids under London's blue-chips.
The price of a barrel of Brent crude subsided 2.4% to US$29.79 while a barrel of US light crude dipped 2.6% to about US$29.6.
Analysts blamed a supply glut and uncertainty over the Chinese economy, although some believe the price falls may be bottoming out.
Separately, a report showed that sustained low oil prices were forcing North American regional banks to cut credit lines to shale oil companies and make provisions, attracting short sellers.
The FTSE 100 Index tumbled 83.76 points to 5793. Connor Campbell at spread-betting firm Spreadex said: "The FTSE is already down nearly 1.5%, no doubt damaged by the fact that Brent Crude has tumbled back below the $30 per barrel mark. And it looks like the commodity’s continued collapse is (as ever) going to define the FTSE’s day."
On the economic front, Bank of England governor Mark Carney was due to give a speech explaining the UK’s low inflation and lack of impetus to raise rates, prompting economists to say it was unlikely to lift spirits.
Back in the markets, investors were raising a glass to Marston's (LON:MARS) after the pub and brewing group served up a good Christmas and New Year. Shares rose 6.7p to 157.4p.
But EasyJet flew 26p lower to 1605p as the budget airline reported lower revenue in the first quarter due partly to lower demand after the Paris terror attacks.
Dixons Carphone (LON:DC.) reported a record Black Friday and buoyant discounted sales after Christmas, lifting group like-for-like revenue in the 10 weeks to January 9 by 5%. The shares rose in early trading but fell back later, standing 6.7p adrift at 460.4p.
Elsewhere, Amerisur Resources (LON:AMER) ticked up 0.32p to 20.32p as the oil and gas producer and explorer focused on South America bought privately owned Platino Energy (Barbados) from COG Energy for US$7mln.
Union Jack Oil (LON:UJO) had strengthened its partnership with Egdon Resources (LON:EOG) in the UK onshore industry by taking a stake in the Laughton prospect in the East Midlands. Shares rose 4.35% to 0.12p.
Sound Energy (LON:SOU) was 0.25p up at 16.62p after agreeing terms to take a 75% stake in the Sidi Moktar onshore licences in Morocco.
MARKET PREVIEW
Britain's blue chip index is called to start lower after falling yesterday as the weak oil market continues to dominate movement.
In Asia overnight, stocks fell away again, with Japan's Nikkei 225 index plummeting 438 points and the Shanghai Composite Index in China shedding 95 points.
On Wall Street, the Dow Jones finished 209 points down at 15,885, while the tech heavy Nasdaq closed 73 down and the S&P500 was 30 points lower at 1,877.
Footsie closed down 23 at 5,877 but is today called by spreadbetters at IG Index, to open a further 58 points lower.
Oversupply issues continue to dominate weak oil trading and the price of the black stuff went into reverse on Monday on further pressure as the head of OPEC called for countries outside the cartel, which produce oil, to co-operate to help the glut problem.
The price of WTI crude is currently under US$30 a barrel at US$29.47.
And uncertainty in markets could be set to continue with a clutch of key data coming out.
In the US, Consumer confidence is due on Tuesday, ahead of consumer sentiment and fourth-quarter GDP on Friday.
Also in focus is the Federal Reserve meeting on Tuesday and Wednesday, as well as the Bank of Japan's meeting later in the week.