Crude oil prices crashed nearly 5 per cent, with Brent Crude falling to $41 per barrel.
U.S. crude futures also were down sharply by more than 4 per cent at $38.60 a barrel, after falling near 6 per cent percent in early morning trade.
Saudi Arabia, another big oil producer stuck to its ground, that it would not cut production unless others do.
However, a drop in crude prices tends to benefit oil marketing companies in India, which may see their shares rally. Shares like BPCL and HPCL are expected to open sharply lower.
A fall in crude prices has led to a drop in the Asian indices, with the Japanese Nikkei the Shanghai Composite and the Hong Kong's Hang Sang all down in trade.