The price of Brent crude oil has fallen below $50 a barrel for the first time since May 2009.
It fell more than a dollar to $49.92 a barrel in early trading on Wednesday before edging back above the $50 mark.
Slowing global growth and increased supply of oil and gas have pushed prices sharply lower in recent weeks.
The price of oil traded in the United States, known as West Texas Intermediate crude, has already fallen below $50.
Many observers expect the price of oil to fall further as North American shale producers continue to supply increasing quantities of oil and gas, and the oil-producing group Opec resists calls for cuts in production to support prices.
“With no sign that Opec will do anything about over-production, it seems likely that we could well see further declines towards $40 in the coming weeks,” said CMC Markets analyst Michael Hewson.
Whilst many consumers and businesses welcome a drop in the cost of fuel, oil producing countries including Russia and Venezuela have been hit as the price of their main export falls.
The oil price has now fallen by more than half since June when the price stood at $110 per barrel.
“All the net exporters of oil are the ones that are suffering at the moment,” said Iain Armstrong, oil market analyst at investment management firm Brewin Dolphin.
“Unless you’re lucky enough to be tied to the dollar, your currency is going to be in big trouble, i.e. just like Russia.”
In the UK politicians have called for more of the fall in oil prices to be passed on to consumers.
On Monday, Chancellor George Osborne tweeted that it was “vital this is passed on to families at petrol pumps, through utility bills and air fares”.
Speaking BBC Radio 5 Live Sainsbury’s chief executive, Mike Coupe said fuel prices could eventually fall below a pound a litre:
“We have certainly seen prices chased down, mainly by the supermarkets,” he said.
“You could feasibly see fuel prices fall below the £1 barrier.”
All the major supermarkets have reduced fuel prices this week.