Fast-rising oil output in North America and tepid economic growth had raised expectations the Organization of the Petroleum Exporting Countries (Opec) will cut output when it meets in November to stem a near 25 percent price slide since June.
But on Friday Saudi Arabia said it had raised its oil production by 100,000 barrels per day (bpd) in September, raising doubts the world's top exporter will be prepared to take unilateral action.
"It's panic mode. Panic and capitulation. We are now in uncharted territory," said Carsten Fritsch, commodities analyst at Commerzbank.
"The rout will probably continue until Opec says enough is enough."
Brent crude for November delivery was down 77 cents at US$89.28 a barrel by 1040 GMT (6.40pm Malaysian time), after falling earlier to US$88.11 – its lowest since December 2010.
US November crude dropped US$1.30 to US$84.47 a barrel. The contract, also known as West Texas Intermediate (WTI), hit a session low of US$83.59, its lowest since July 2012.
Oil output has also risen in Opec members Iraq and Libya, the group said in its monthly oil market report on Friday, despite violence and instability in both countries. Total Opec output grew by 400,000 bpd to 30.47 million bpd.
Combined with subpar economic data from Europe and Asia, that has pushed Brent more than US$25 lower since hitting a year high of US$115.71 in June. Brent is on track to record the third straight week of losses.
Global shares fell to a six-month trough as concern about a recession in Germany was compounded early on Friday as sources in the ruling coalition said Europe's largest economy would cut its growth forecasts for 2014 and 2015 next week.
China, the world's second-largest oil consumer, is also seeing signs of a slowdown. Data due next week is forecast to show that softer domestic demand probably slowed growth in China's imports, investment and retail sales to multi-month or multi-year lows in September.
Cuts to Iran's official selling prices for its crude raised more doubts about the group's willingness to curtail supply in an effort to stabilise prices. Fritsch called the Iranian price cut "a devastating signal", and analysts said other producers could follow suit.
"They're all fighting for market share through the official selling prices," said Olivier Jakob, managing director of PetroMatrix.
"They're really not showing any signs, and Saudi Arabia has not shown any signs, that they will cut production."
Any action is unlikely before Opec's November 27 meeting. On Thursday, the main reference price for OPEC crude oil exports fell to its lowest since 2010, tracking the slump in global oil benchmarks.
The relentless decline in oil prices prompted investment bank Barclays to slash its average fourth-quarter forecast for Brent to US$93 a barrel from US$106 previously. It also cut its estimate for WTI to US$85 from US$98. – Reuters