NEW YORK (AP) — Oil prices sunk below $90 a barrel Monday for the first time in eight months on expectations that a widening financial maelstrom will drastically reduce global demand for energy.

Crude's decline accelerated for a fourth day as investors appeared to give up hope that the U.S. government's $700 billion rescue plan would provide a quick fix for the stumbling economy.

Light, sweet crude for November delivery fell $4.81 to $89.07 a barrel on the New York Mercantile Exchange, after earlier dipping to $88.57, the lowest level since Feb. 8. On Friday, the November contract lost 9 cents to close at $93.88 a barrel.

In London, November Brent crude fell $4.72 to $85.53 a barrel on the ICE Futures exchange.

A significantly stronger dollar also weighed on prices. Oil prices have tumbled nearly 40 percent since peaking at $147.27 a barrel on July 11.

The drop came as world stock markets plunged amid growing investor anxiety that the U.S. bad debt crisis is enveloping Europe. Germany announced Sunday a bailout package totaling $69 billion for Hypo Real Estate, the country's second-biggest commercial property lender, part of a scramble by European governments to save failing banks. As anxiety deepened, the Dow Jones industrial average fell below 10,000 for the first time in four years.

"The market is finally acknowledging that this credit crisis is a global phenomenon and that will equate to lower world oil demand in the future," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago. "People thought the crisis would be contained to the U.S. and we'd see oil demand in China and India continue to grow. Now that just doesn't seem possible."

The widening scope of the crisis has forced consumers and businesses everywhere to cut back on fuel consumption. In India, domestic oil product sales totaled 2.41 million barrels per day in August, the lowest level this year, while Japan's oil demand fell by 8.4 percent in the same month, according to Barclays Capital research. In the same month.

In other signs the meltdown is spreading, Belgian Prime Minister Yves Leterme said Sunday that France's BNP Paribas SA had committed to taking a 75 percent stake in Fortis NV.

British treasury chief Alistair Darling said he was ready to take "pretty big steps that we wouldn't take in ordinary times" to help the country weather the credit crunch.

Oil market traders are now watching to see if oil prices will sink to the next key technical level of $85 a barrel, the price for a barrel of crude when it began its historic run-up late last year.

"If we take out that area, we could see a major washout of this market," Flynn said. "We could be talking $50 or $60 oil."

If that happens, analysts say the Organization of Petroleum Exporting Countries may to cut production and keep prices from falling further.

Iranian Oil Minister Gholam Hossien Nozari on Saturday called on fellow OPEC members not to pump too much oil.

Traders were also watching currency movements as investors tend to buy commodities like oil to defend against dollar weakness and a hedge against inflation, but sell crude as the U.S. currency strengthens.

"With Europe starting to be in panic mode, the dollar is gaining by default of the euro weakening and this continues to be a negative factor for commodities," said Olivier Jakob of Petromatrix in Switzerland.

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Associated Press Writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.