Shares in FTSE 100 giants Royal Dutch Shell and BP dropped 2.9 per cent and 2 per cent respectively in Monday trading as the price of oil dipped below $40 a barrel.
The brief dip, which was weighed down by an Opec report that said output had reached record levels, represents the first time oil has fallen below the $40 mark since April.
West Texas intermediate ended the day at $40.06 while slipping to $39.86 earlier in the day.
Brent Crude reached lows of $41.87, but finished the day at $42.19.
The FTSE 100, which has fared well in the period following Brexit due to its overseas earnings, ended the day down 0.5 per cent lower at 6,693.95.
Banking stocks also dragged down the blue chip index, with Barclays and Royal Bank of Scotland closing the day down 2 per cent and 2.9 per cent respectively.
The falls followed the EBA’s stress testing on Friday, whereby Barclays was the worst performing UK bank. RBS was also in the15 worst-performing banks from Europe.