The price of Brent crude oil has fallen below $59 (£37) a barrel for the first time in five years, reaching $58.94.
Oil prices have now nearly halved since reaching a 2014 high of $115 a barrel in June after the Organization of Petroleum Exporting Countries (Opec) agreed at the end of November to leave output unchanged.
Its collective daily oil output target thus remains at 30 million barrels for the next six months.
The decision came despite a global supply excess that many analysts blame on ongoing US production and Opec supplies being ahead of targets, along with a slowdown in demand in China and Europe.
The sharp drop in the cost of crude is affecting many oil producers, with Russia dramatically increasing its interest rate from 10.5 per cent to 17 per cent today (December 16th) in an attempt to halt the slide in the rouble.
However, falling oil prices will not prompt a cut in oil production levels, the head of the Organization of Petroleum Exporting Countries (Opec) has stated.
Speaking in Dubai a few days ago, Abdallah Salem el-Badri, secretary general of the oil producers' cartel, explained that an issue such as price would not dictate the oil output of the member nations.
He added that the move was not designed to undermine other oil producers: "The fundamentals should not lead to this dramatic [in price]. Some people say this decision was directed at the United States and shale oil. All of this is incorrect. Some also say it was directed at Iran. And Russia. This also is incorrect."
Meanwhile, Chancellor George Osborne said the collapse in world oil prices is "overall a very good thing" for Britain, the US and Western economies, the Daily Telegraph reports.
The Chancellor called the fall in oil prices this year a "net positive" that would also put pressure on Russian president Vladimir Putin and his oil-dependent economy.
"We have important oil and gas industries in the US and the UK but nevertheless this is a big boost for American and British consumers and businesses," he said at the end of an address to the Economic Club of New York.
Find out about commodities trading and learn CFD strategies at City Index