Oil prices tumbled 7 per cent in the US yesterday as traders there responded to Monday's surprise announcement from Saudi Arabia that it was prepared to increase oil production. US markets were shut on Tuesday for the Independence Day holiday, but yesterday's opening on the New York Mercantile Exchange marked a further sell-off following the Saudi offer.

Soon after the opening in the US, crude was down $2.25 to $30.25 (£20.17).

Saudi Arabia had said that it was prepared to boost output by 500,000 barrels a day, but the proposal has been criticised by Iran and Iraq.