At 10.17am (AEDT), the benchmark S&P/ASX200 index was down 64.3 points, or 1.8 per cent, to 3,516.9, while the broader All Ordinaries index had lost 58.3 points, or 1.66 per cent, at 3,463.4.
On the Sydney Futures Exchange, the March share price index contract was 64 points lower at 3508 on a volume of 4299 contracts.
Oil prices tumbled to their lowest points for more than four years, diving under $US38 per barrel in New York, as rising US energy reserves heightened global demand worries amid a worldwide economic slowdown.
BHP Billiton, the biggest company on the index as well as Australia's largest oil producer, slumped $1.37, or 4.42 per cent, to $29.63.
Rival Rio Tinto also dropped $1.66, or 4.15 per cent, to $38.34.
The pure energy producers also slumped, with Woodside falling $1.63, or 4.82 per cent, to $32.18, Santos dropping 45 cents, or 3.19 per cent, to $13.65 and Oil Search decreasing 26 cents, or 5.79 per cent, to $4.23.
The price of gold in Sydney was $US852.10 per fine ounce, down $US12.90 on Thursday's close of $US865.00.
Among gold stocks, Lihir tumbled eleven cents, or 4.01 per cent, to $2.63 and Newcrest increased 26 cents to $30.62.
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