Oil prices slumped by more than 6 per cent on Friday after Britain voted to leave the European Union, raising fears of a broader economic slowdown that could reduce demand for oil.
Financial markets have been worried for months about what Brexit, or a British exit from the European Union, would mean for Europe's future, but were clearly not fully factoring in the risk of a leave vote.
British Prime Minister David Cameron, who campaigned to remain in the EU, said he would stand down by October.
Brent crude was down $1.91 at $49 a barrel at 0849 GMT. U.S. crude was down $1.87 at $48.25 a barrel.
Earlier in the day, both contracts were down by more than $3, or over 6 per cent, the biggest intra-day declines for both since April 18, when a meeting of top global oil producers failed to agree on an output freeze.
Sterling sank 10 percent in value to its weakest since the mid-1980s. The FTSE 100 fell more than 8 per cent at the open, with banks among the hardest hit.
“The global uncertainly that (the vote) is likely to unleash is likely to have a potentially negative effect on GDP growth, not only in the UK, but potentially in Europe,” said Michael Hewson, chief market analyst CMC markets.
“Obviously we don't know that yet, but certainly in the context of where we were 24 hours ago, the knee-jerk reaction is to sell on the reality,” he added.
Downward pressure seen
Some analysts said oil could face further downward pressure.
“Our view is that we have not yet seen the low oil price of the day with Brent likely to trade down towards $45 or lower before we have seen the worst of it,” Bjarne Schieldrop, chief commodity analyst at SEB, said in note to clients.
Oil major BP said on Friday its headquarters would remain in the United Kingdom, despite the vote.
“It is far too early to understand the detailed implications of this decision and uncertainty is never helpful for a business such as ours,” BP said.
The vote to break with Europe is set to usher in deep uncertainty over trade and investment and fuel the rise of anti-EU movements across the continent.
Analysts have said that once the market refocuses on fundamentals, oil was likely to fall given abundant stocks around the world which are shrinking very slowly despite large production outages in countries like Nigeria.