Oil prices dropped $2 on Thursday after U.S. President Donald Trump announced reciprocal tariffs on trading partners, stoking concerns that a global trade war may dampen demand for crude.

Brent futures fell $1.97, or 2.63%, to $72.98 a barrel by 0033 GMT. U.S. West Texas Intermediate crude futures were down $1.98, or 2.76%, to $69.73.

Trump touted April 2 as "Liberation Day," bringing new duties that could overturn the global trade system.

Both benchmarks settled higher in the previous session but turned negative over the course of Trump's press conference on Wednesday afternoon in which he announced a 10% baseline tariff on all imports to the United States and higher duties on dozens of the country's biggest trading partners.

"We know it will be negative for trade, economic growth and thus oil demand growth. But we don't know how bad it will be as the effects come a little bit down the road," said Bjarne Schieldrop, chief commodities analyst at SEB.

Imports of oil, gas and refined products were exempted from U.S. President Donald Trump’s sweeping new tariffs, the White House said on Wednesday.

Trump's tariff policies could stoke inflation, slow economic growth and intensify trade disputes, possibilities that have weighed down oil prices.

Reinforcing bearish sentiment, Energy Information Administration data on Wednesday showed U.S. crude inventories rose by a surprisingly large 6.2 million barrels last week, against analysts' forecasts for a decline of 2.1 million barrels.

Reuters