US benchmark oil price was also lower, falling to 1.4% to $82 in early trade before recovering to $84.10.
Brent crude bounced back in later trading to $99.47, but is still more than 25% below its March peak.
The fall comes as traders bet on reduced demand from Chinese factories with eurozone woes adding extra pressure.
However, the resulting lower fuel and raw material costs could lower bills for firms and households.
Saudi oil policy
The world's biggest exporter of crude oil, Saudi Arabia, started to scale back shipments in June.
The lead member of the Opec oil cartel had been pumping more than 9.5 million barrels of oil a day for the past year in an attempt to offset hoarding by countries afraid that increased Middle East tensions might disrupt global supply.
At it's peak in April 2011 the world US benchmark West Texas Intermediate was trading at nearly $114 a barrel. Saudi policy had been to lower the price to approximately $100 per barrel.
A fall of more than 20% from its peak price is often defined as a bear market.
The sharp turnaround in oil prices has been mirrored by other commodity prices in recent months. Silver spot prices are down 23% to $1424 per troy ounce. Platinum prices have fallen 17%.
Gold, the traditional safe-haven for investors fleeing volatile stock markets and fragile banks, has fared better. It's down 14% at $1,586.
The price of base metals, such as copper used in construction industries hit by the downturn in government spending and property markets around the world, is also down.
The three-month benchmark contract traded in London has fallen 14% this year.