The price of U.S. crude skidded to its lowest level in almost six and half years on Friday as fears of global oversupply and weakness in Asian economies continued to mount.
Vast stockpiles and refinery shut downs only served to increase the glut concerns and, as the price continues to fall, emerging market economics particularly sensitive to the commodity are coming under pressure.
U.S. crude sank to lows of $41.35 in early trading, its lowest since March 2009, before bouncing to trade around $42.30 per barrel. Brent crude also pared losses to trade 16 cents higher at $49.38.
The latest casualty of the price slump on Friday was the Malaysia's ringgit, which tumbled to a 17-year low as the oil price drop and political turmoil sparked capital outflows.
As a major oil exporter, with crude accounting for close to a third of government revenues, there are rising concerns that slumping oil prices will continue to dent economic growth in Malaysia.
"A couple of days ago it was around about 3.90 (against the U.S. dollar) and to go from there to almost about 4.10 at such a rapid pace, is really remarkable. There is a combination of factors weighing on the Malaysian ringgit at the moment, starting with oil," Callum Henderson, global head of FX research at Standard Chartered Bank told CNBC.
"If you look at the commodity complex as a whole, it is significant in terms of a trade negative for Malaysia. You also have political concerns on top of that and China's depreciation of yuan against the dollar," he added
Malaysia is not the only emerging market to feel the pain of the oil price drop, with fellow commodity currencies, the Brazilian real, the Russian rouble and the Colombian peso all slumping against the U.S. dollar in recent weeks.
Perma-bear Marc Faber, publisher of The Gloom, Boom & Doom Report, said the relationship between oil price weakness and slowing emerging economies is a "vicious cycle on the downside"
"Supply didn't really kill the oil price. In my view it is a sudden slowdown in demand that came largely out of China and other emerging economies. If commodity prices go down in Brazil and China buys less from Brazil, then the Brazilian economy contracts and you can actually buy less goods from China. So it is a vicious cycle on the downside," he told CNBC Friday.
Meanwhile, in the euro zone, gross domestic product data pointed to slightly lower-than-expected figures, but still confirms a ninth consecutive quarter of expansion, with private consumption holding up fairly well according to analysts.
Low energy prices and a weaker euro has aided euro zone exporters, fueling growth. As a net importer of oil, Europe is enjoying the knock down prices of crude which has in turn been converted into consumer spending power.
Senior European Economist at Societe Generale, Anatoli Annenkov said the China weakness seen so far over the summer has come as a bit of surprise, and suggests global demand is perhaps weaker than previously thought, but for Europeans, cheap oil is definitely a bonus.
"We are still treating the oil story as a supply issue mainly. But from the European perspective, the recovery we are having in Europe is more domestic demand-led, rather than export-led. So, in that sense, weak oil prices actually benefits consumer and that has been the story for the year," Annekov told CNBC.
"It leads to lower inflation, lower inflation is bad for the ECB, but it is very useful for real disposable incomes which have risen quite strongly, so we actually believe in a consumption led recovery," he added.
European economist at RBC Capital markets, Timo del Carpio said Friday's growth numbers out of the euro zone revealed a growth story was still in motion and while certain cyclical factors such as cheaper oil prices were helping the recovery, he still had high hopes for the euro area economy.
"Undoubtedly, much of the recovery story is still one centered around 'cyclical tailwinds' (e.g. weaker oil prices, a subdued exchange rate, and the release of pent-up demand) ," he said in a note to clients, published on Friday.
"Given the potentially transitory nature of these tailwinds, this may in turn raise questions about the sustainability of the recovery going forward. We nevertheless think it would be a mistake to dismiss the still evident momentum over the first half of 2015 as a mere cyclical boost, not least when other long-standing headwinds on growth continue to recede."