The price of US oil has fallen below the symbolic threshold of 50 dollars a barrel for the first time since April 2009.
Benchmark Brent crude also tumbled about six percent to below 53 dollars a barrel.
The price of both have lost more than half their value since mid-2014.
Brent had a dramatic drop at the tail end of the year and during 2014 slumped a total of 48 percent, the most since the 2008 financial crisis. A global supply glut and weak demand could cause prices to fall further.
The sharp drop in crude prices hurt financial and commodities stocks most. The eurozone’s blue-chip Euro STOXX 50 fell 3.78 percent the biggest one day percentage drop since October.
Paris and Madrid were down over three percent, Milan fell almost five percent. while London dropped two percent.
In Athens lenders National Bank, Bank of Piraeus and Alpha Bank fell 5.2 to 7.4 percent.
Energy and mining stocks were worst hit. The European oil and gas and basic resources indexes fell 3.8 and 3.1 percent respectively.
But expectation of cheaper oil and a weaker euro helped travel and leisure, down 0.3 percent, to outperform.
Carnival, IAG and Air France-KLM rose 1.7 to 2.1 percent.