London's benchmark FTSE 100 index slumped 2.49 per cent to end the day at 6,300.63 points, while in Paris the CAC 40 sank 2.77 per cent to 4,108.93 points and Frankfurt's DAX 30 dropped 2.72 percent to 9,594.73.
Milan plunged 3.13 per cent and Madrid fell 2.75 per cent.
The slide in oil prices this week below the psychological USD 60 per barrel level hit share prices hard, with the FTSE 100 falling 6.6 per cent over the week, the CAC 40 tumbling 7.0 per cent and the DAX 30 retreating 4.5 per cent.
Brent crude for January meanwhile dived to USD 61.35 in London trading.
The oil market -- which has shed almost 50 per cent since June -- plumbed the latest lows after the Paris-based International Energy Agency slashed its 2015 demand outlook, despite plunging prices which would normally lead to increased consumption.
Demand is set to grow by 0.9 million barrels a day to reach 93.3 million barrels, some 230,000 barrels less than the previous forecast, the IEA energy watchdog said in a report.
The drop in oil prices hit energy sector shares hard as they eat into company profits.
Shares in oil services company Petrofac topped the FTSE 100 losers, shedding 6.4 percent to 678 pence.
BP fell 3.3 per cent to 385 pence and Royal Dutch Shell's B share gave up 3.4 per cent to 2,031.5 pence.
Back in Paris, shares in French oil and gas giant Total dropped 3.4 per cent to 41.14 euros.
At the same time, however, cheaper crude also helps stimulate economic growth in the longer term, as consumers have more free cash and stocks usually gain as companies post higher profits.