Oil prices plunged more than eight percent Tuesday on lower demand expectations with nearly 30 million people under Covid lockdown in key consumer China.
Crude futures slumped under $100 per barrel just a week after benchmark contract Brent North Sea soared to a 14-year high close to $140 following Russia's invasion of Ukraine.
Equity markets also slumped Tuesday, with tech firms leading the collapse following the Covid shutdown of China's tech hub Shenzhen.
"The (stock market) negativity has spread beyond China's borders with chip makers in Europe taking a hit," noted Victoria Scholar, head of investment at Interactive Investor.
Global stock markets have been in a spiral since Russian troops marched into Ukraine, leading international powers to impose crippling sanctions on the country and numerous companies to pull out.
The UK government on Tuesday imposed an additional 35-percent import tariff on a swathe of Russian goods, including vodka, and banned exports of luxury products.
"We want to cause maximum harm to (Russian President Vladimir) Putin's war machine while minimising the impact on UK businesses," the Department for International Trade said.
"This double whammy of the ongoing conflict in Ukraine, with the fresh chaos caused by Covid in China is rattling nerves," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Among the hardest-hit stock markets in recent days has been Hong Kong, which was already under pressure from China's regulatory crackdown on technology firms as part of the government's move to tighten its grip on the economy.
News that US authorities were also looking to crack the whip over Chinese firms listed in New York added to the selling pressure.
"In the short term we think overall Chinese equities will continue to face selling pressure. Longer term, the strong will survive and likely get stronger, bigger," predicted Sharif Farha at Safehouse Capital.
Hong Kong's main stocks index, the Hang Seng, dived more than six percent at one point Tuesday.
Afternoon selling wiped out a minor bounce from data out of China suggesting its economy started 2022 on a positive note.
- Key figures around 1130 GMT -
West Texas Intermediate: DOWN 8.2 percent at $94.52 per barrel
Brent North Sea crude: DOWN 8.1 percent at $98.27
London - FTSE 100: DOWN 0.9 percent at 7,127.72 points
Frankfurt - DAX: DOWN 1.0 percent at 13,794.75
Paris - CAC 40: DOWN 1.0 percent at 6,305.67
EURO STOXX 50: DOWN 1.0 percent at 3,704.36
Hong Kong - Hang Seng Index: DOWN 5.7 percent at 18,415.08 (close)
Tokyo - Nikkei 225: UP 0.2 percent at 25,346.48 (close)
Shanghai - Composite: DOWN 5.0 percent at 3,063.97 (close)
New York - Dow: FLAT at 32,945.24 (close)
Euro/dollar: UP at $1.0986 from $1.0949 late Monday
Pound/dollar: UP at $1.3056 from $1.3003
Euro/pound: DOWN at 84.15 pence from 84.18 pence
Dollar/yen: DOWN at 118.02 yen from 118.19 yen