Oil prices dived late last night amid brewing trade war tensions and a move by Libya to ramp up its oil production.
Prices in Brent crude dropped 6.9 per cent to $73.40, marking the biggest decline in over two years, while US crude suffered its worst fall in a year after tumbling 5 per cent to $70.38.
The dip was triggered by Libyas state oil company saying yesterday it plans to increase supply to match rising demand through the reopening of four export terminals that had been closed since late last month.
However, escalations in Washingtons tit-for-tat trade war with Beijing also helped push oil prices down, with threats from Donald Trump to impose a further $200bn worth of tariffs on Chinese imports.
The falling prices are fresh evidence of a volatile oil market, which has been spooked by White House pledges to sanction Iran, the Organisation of the Petroleum Exporting Countries' (Opec) third-largest oil producer.
Such volatility comes in the wake of yesterdays monthly market report from Opec, which showed that Saudi Arabia had raised production by more than 400,000 barrels a day last month.
Jasper Lawler, head of research at London Capital Group, said: "Given that China and the US together account for about a third of global oil demand, any slowdown in these economies on the back of a trade war would logically impact demand for oil and therefore its price. This is a rational fear and one that could see Brent take out support at $72.50 on news of a retaliation by China."