The price of Brent crude dropped to $87.74 a barrel, its lowest since December 2010, before recovering some ground to $88.12.
US light crude oil was down $1.40 at $84.42, close to a two-year low.
The prospect of weak economic growth cutting demand for oil has hit prices. In addition, key Opec producer Saudi Arabia has signalled it could cope with lower prices.
Last week, the International Monetary Fund shaved its forecast for global growth for this year from 3.4% to 3.3%.
It said overall global growth would be held back by weakness in Japan, Latin America and Europe, with any recovery in the advanced economies “weak and uneven”.
The gloomy growth outlook continued to weigh on stock markets on Monday, with the main European indexes all opening lower following hefty falls last week.
Share values have been hit recently, with some analysts arguing they are catching up with economic reality.
There have been two significant changes in the oil market recently.
At the start of this month, Saudi Arabia said it would cut its selling price for oil in a move to protect its market share, something that was described as a “structural change” as Saudi Arabia had never explicitly competed on price.
The other more dramatic development has been the growing extraction of shale oil in the US, which has increased the country’s production of oil significantly.
The International Energy Agency has forecast that the US will soon overtake Saudi Arabia and Russia to become the world’s biggest oil producer.