Oil prices have fallen on speculation that Colonel Muammar Gaddafi's 40-year rule in Libya is on the edge of collapse.
Brent crude in London plunged more than 3% to 105.5 US dollars a barrel, while US sweet crude fell nearly 1% to 81.48 US dollars.
The cost of oil fell on hopes that an end to the conflict in Libya would see the North African country's oil supplies restored and increase global supplies.
As the conflict between rebels and Colonel Gaddafi's forces escalated earlier this year, oil prices shot up as the supplies in Libya, the world's 12th largest oil exporter, were heavily restricted.
Libya pumped around 1.6 million barrels per day, nearly 2% of global supply, before the conflict hit output when it broke out in February.
Around 85% of Libyan oil output was exported to Europe until the revolt disrupted the country's production.
European refineries have struggled to make up for the production loss despite an increase from Saudi Arabia.
As the conflict winds down, production is likely to rise again, analysts predict. Andrew Lipow, analyst and president of consultancy firm Lipow Oil Associates, said oil markets are likely to respond with "a sigh of relief that conflict has come to the end".
But he warned that it will take time for the market to erase the hefty price increase which resulted from the suspension of Libyan oil exports.
When the fighting broke out, oil was trading at around 84 US dollars a barrel before it quickly spiked above 93 US dollars and kept rising to a high above 110 US dollars by the end of April.