Share prices fell further in European trade as fears deepen over prospects for the global economy. Earlier, the Brent crude benchmark fell $1.65 to $88.40 a barrel, a near four-year low, although it recovered some ground to stand at $89.65.
IMF chief Christine Lagarde, crystallised investors' worries about flagging economic growth by warning the eurozone could return to recession.
Shares in Paris and Frankfurt also slumped further, with France's Cac 40 down 1.8% and Germany's Dax down more than 2%.
The falls came after big declines in the US and Asia. On Thursday, the Dow Jones had its biggest one-day fall of the year, closing down almost 2% at 16,659.25.
In Tokyo on Friday, the Nikkei closed down 1.15% at a two-month low of 15,300.55.
US oil fell $1.92 a barrel to $83.85, its weakest level since June 2012, although it also regained some ground to stand at $84.79. Both oil benchmarks remain about 20% since their peak in June.
Oil prices have been undermined by a combination of increasing supplies and weakening demand.
Libya has recently increased its supply of oil to the open market, and demand from China, the world's second biggest user of oil, has slipped as its economic growth has slackened off. This week, German economic data has presented a consistently negative picture. Figures released on Thursday showed exports fell 5.8% in August, and this followed weak industrial output figures on Tuesday.
Ms Lagarde's comments that there was a 35-40% chance of the eurozone re-entering recession piled on the woes.
Earlier this week, the IMF cut its forecasts for global growth in 2014 and 2015.
Its downgrade of prospects for the three biggest eurozone countries' economies - Italy, France and Germany - prompted the Chancellor, George Osborne, to warn the UK economy was facing a "critical moment".
He told the BBC: "The eurozone risks slipping back into crisis. Britain cannot be immune from that. It's already having an impact on our manufacturing and our exports."
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: "Concerns around the lack of global economic growth are spooking investors.
"In particular, the situation in China remains unclear, whilst within the eurozone, even the supposed powerhouse of Germany could be staring into another recession."
Added to that are persistent worries about the geo-political situation in the Middle East and Ukraine, as well as growing concerns about the Ebola virus and its impact on West Africa and its spread into other countries.