BP suffered a loss after taxation of $6.48bn (€5.97bn) last year, compared with a net profit of $3.78bn in 2014, it said in a results statement.
The energy major added it would slash 3,000 positions in its downstream business—including refining, marketing and distribution—by the end of 2017.
Earnings were hit by a $2.6bn charge in the fourth quarter that was mostly linked to impairments in the upstream division, or exploration and production, as well as restructuring costs.
The company took another $12bn hit for the Gulf of Mexico oil spill, taking its total bill for the tragedy to $55.5bn.
BP added that underlying replacement-cost profit—which excludes fluctuations in the value of crude oil inventories—more than halved to $5.9bn last year.
The earnings measure tumbled to just $196mn in the fourth quarter, from $2.2bn a year earlier.
“The lower underlying result was predominantly driven by the impact of steeply lower oil and gas prices on BP’s upstream segment,” the company said.
In late morning deals, BP’s share price tanked 8.26% to 336.60 pence on the London stock market, which sank 1.72% in a global selloff.
“Sustained low prices have seen BP post their worst annual loss in 20 years as the company looks to cut more jobs in order to cut costs and fight back towards profitability,” noted GKFX analyst James Hughes.
Oil prices have crashed about 75% since mid-2014, hit by the slowing global economy, the strong US dollar—and a chronic supply glut that has been exacerbated by Opec’s refusal to curb crude output.
The energy sector has meanwhile slashed jobs and investment in response to the oil price collapse.
BP had already announced plans last year to axe 4,000 jobs in its upstream division in a radical restructuring of the company.
The latest job cuts take its total cull to 11,000 positions since the start of 2015.
“We are continuing to move rapidly to adapt and rebalance BP for the changing environment,” said chief executive Bob Dudley.
“We’re making good progress in managing and lowering our costs and capital spending, while maintaining safe and reliable operations and continuing disciplined investment into the future of our portfolio.”