The FTSE 100 index closed down today as oil companies were hit after the Organisation of Petroleum Exporting Countries failed to agree to curb production.
Opec failed to agree on curbing production despite a global supply glut and the strength of the dollar, which is leading to the collapse of oil prices, with the resulting uncertainty hitting stock markets.
The FTSE 100 closed 0.24 per cent down at 6,223 points, led lower by Royal Dutch Shell, BG Group and BP.
“A stronger dollar and the aftershock of Friday’s Opec meeting are weighing on the oil market,” Tamas Varga, oil analyst at PVM Oil Associates, said.
Royal Dutch Shell B Shares fell 4.23 per cent to 1,518.5p, while Royal Dutch Shell A Shares flopped 4.56 per cent to 1,526.5p. Meanwhile BG Group's shares slumped 4.09 per cent to 983.1p and BP's stock fell 3.36 per cent to 347.6p per share.
"The ability of the FTSE 100 to perform is clearly being hindered by tumbling oil prices, and with Brent hitting a new six-year low, the likeliness is that this will hold back this market for some time yet," said Joshua Mahony, market analyst at IG.
"As Shell, BG and BP lead the FTSE losers, the fate of the FTSE is in the hands of the dollar as another Fed fuelled dollar rally could send crude tumbling once more. With Opec seeming less and less like a cartel and more like an audience with the Saudis, it is likely crude prices could fall further yet."
However, the prospect of falling oil prices led tourism stocks to make gains. TUI's stock was 1.67 per cent up at 1,156p per share, while EasyJet rose 1.79 per cent to 1,705p per share. Carnival's share price was 1.36 per cent up at 3,496p and InterContinental Hotels rose 0.58 per cent to 2,583p per share.
And Rolls-Royce topped the index, rising 2.69 per cent to 610.5p per share on optimism that talks with shareholders this week will help bring about a quicker and more effective turnaround, said CMC Markets analyst Jasper Lawler.
"Broker upgrades for property firm Hammerson and rating reaffirmations after earnings last week for Associated British Foods meant both shares were top risers," he added.
Associated British Foods rose 1.87 per cent to 3,550p per share while Hammeron was seen 1.41 per cent up at 610.5p per share.
Tesco also fell by 3.44 per cent to 157p per share on the same day that veteran Jill Easterbrook announced she would be leaving the company.