The FTSE 100 closed down 2.28 per cent to 5,922.01 points this afternoon, after touching a low of 5,892.87 points earlier in the day.
Shares in BP fell 7.15 per cent to 340.70p after the oil major's replacement cost losses increased by 130 per cent to $2.23bn in the fourth quarter.
"This morning's results from BP have added to the gloom surrounding the sector," Michael Hewson, chief market analyst at CMC Markets, wrote in a note.
"While the dividend has been maintained the question now is whether it will continue to be so given that energy prices still show no signs of finding a base."
Oil prices continued to career lower today, with West Texas Intermediate crude falling back below $30 per barrel. It came as speculation surrounding a possible production cut deal between Opec and non-Opec members dampened.
Goldman Sachs said it was "highly unlikely" Opec would cooperate with Russia to cut output, saying this would be self-defeating as stronger oil prices would bring previously abandoned production back to the market.
Weir Group closed down 8.71 per cent to 791.94p per share, while Tullow Oil ended the day 7.48 per cent lower at 158.4p.
Meanwhile, mining stocks also suffered, after Standard & Poor's cut BHP Billiton's rating due to the commodity rout, while warning it could lowered further.