With the stalling of budget talks in the US, and the likelihood of the clash over the so-called `fiscal cliff' negotiations intensifying further, oil prices plunged below $110 per barrel on Thursday.

With the budget talks-related action shifting to the US House of Representatives for the first time, oil prices witnessed a 59-cent drop - to $89.39 per barrel - on Thursday; while Brent crude fell 53 cents to $109.83 per barrel, after settling $1.52 higher in the earlier session.

While the Thursday slide in the oil prices stoked concerns about demand in the US - which is the largest oil consumer in the world -, the `fiscal cliff' talks heated up as President Barack Obama accused opponents of holding a personal grudge against him; and the leading Republican negotiator John Boehner said that the President was being "irrational."

About the stalled budget talks and the respective stances of the two in-conflict parties, Sucden research analyst Jack Pollard said that there has been no material shift in the position; and added that, in all likelihood, a "muddle-through agreement" will be reached.

Further adding that "at the moment we're subject to some political posturing," Pollard said: "As a result we have the oil markets moving with the ebb and flow of the headlines."