New York's main contract, light sweet crude for delivery in November, tumbled 2.35 dollars to close at 58.68 dollars a barrel.

In London, Brent North Sea crude for November delivery plunged 2.02 dollars to a settlement of 58.43 dollars a barrel.

Both contracts are down one-quarter from record highs above 78 dollars reached in July and August.

"Many of the issues that helped push oil prices up in the summer are now doing the opposite," said Adam Sieminski, chief energy economist at Deutsche Bank.

"Oil market traders continue to worry that the global economy is slowing down and inventories are rising. The US hurricane season has fizzled and talks between the UN and Iran on uranium reprocessing are ongoing," he said.

Iran, the world's fourth-biggest crude producer, Tuesday suggested that France should lead a consortium to produce enriched uranium on Iranian soil, as a way out of the impasse with the West over its contested nuclear programme.

The offer from the deputy head of Iran's atomic energy agency came amid warnings that time was running out for Tehran to broker a deal with the European Union and escape possible UN sanctions.

"The Iranian situation seems to have got a lot calmer," Investec analyst Bruce Evers said.