The benchmark Hang Seng Index in Hong Kong shed 494.61 points to end at 22,990.81 on turnover of HK$73.10 billion ($9.40 billion).
"We can only talk about the support level now because global markets are falling like a rock," Francis Lun, general manager at Fulbright Securities, told Dow Jones Newswires.
"As long as (Libyan leader Moamer) Kadhafi is in power, instability will reign in the oil market."
Hong Kong, Shanghai and other Asian bourses tumbled as unrest in the Middle East and North Africa intensified, particularly in Libya where security forces reportedly fired on demonstrators from war planes and helicopters.
Concerns about a potential disruption to crude supplies drove up oil prices, with Brent passing $107 a barrel in Asian trade.
Cathay Pacific tumbled 5.1 percent to HK$18.08 on anxiety that the higher crude prices would drive up the airline's operating expenses.
Major Chinese oil company CNOOC rose 1.3 percent to HK$17.80.
Alibaba.com plunged 8.6 percent to HK$15.24, after the e-commerce firm said its chief executive and chief operating officer had resigned after a probe found more than 2,300 fraudulent accounts on its site.
The Shanghai Composite Index, which covers both A and B shares, tumbled 2.62 percent, or 76.73 points, to end at 2,855.52, its worst performance since January 20.
The index was also hit by news late Monday that the Communist Party's top decision-making body wants China to maintain stable prices this year and prevent big economic fluctuations, according to Xinhua news agency.
"The statement sparked concerns that the magnitude of further tightening efforts will be bigger than anticipated," Guotai Junan Securities analyst Shi Weixiang said.
China Friday increased the amount of money banks must hold in reserve for the second time this year. Earlier in February the central bank hiked interest rates for the third time in three months as it struggles to rein in inflation.
Market liquidity was also squeezed as investors began withdrawing funds to take advantage of Sinopec's 23 billion yuan ($3.5 billion) convertible bond issue on Wednesday, dealers said.
Citic Securities ended 4.5 percent lower at 13.53 yuan after rising 20 percent in the past 14 sessions, while Industrial Securities fell 6.5 percent to 16.45 yuan after gaining 32 percent over the same period.
Banks fell on tightening fears.
Industrial Bank ended down 4.3 percent at 25.64 yuan and China Everbright Bank fell 3.5 percent to 3.82 yuan.