The resignation of US President Donald Trump’s economic adviser Gary Cohn has resulted in a dip in oil prices.

The stepping down of the adviser, who is considered a staunch supporter of free trade policies, caused a 1% fall in S&P 500 futures and spread fear among traders that the US Government will go ahead with import tariffs.

Taking a cue from the declining stock markets, Brent futures dropped 53 cents, or 0.8%, to trade at $65.26 per barrel, while US West Texas Intermediate (WTI) crude futures fell 46 cents, or 0.7%, to touch $62.14 a barrel, according to Reuters.

Futures brokerage OANDA Asia-Pacific trading head Stephen Innes was quoted by the news agency as saying: “The overhang from the Cohn resignation … could see oil prices move lower during today’s session.”

The resignation was triggered by disagreement over Trump’s plans to increase import tariffs of steel and aluminium.

“Oil prices applied brakes as market optimism reclines on bearish API weekly petroleum reports.”

There is resentment among major trading nations that the tariff hike could lead to a potential global trade war, which has the ability to pull down economic growth and thereby oil consumption.

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By GlobalData

Other contributing factors to the fall in oil prices include rising US crude production and inventories.

Data released by the American Petroleum Institute revealed that US crude stockpiles touched 426.880 million barrels, which represents an increase of 5.661 million barrels.

Brokerage firm Phillip Futures, in a note, was quoted by the news agency as saying: “Oil prices applied brakes as market optimism reclines on bearish API weekly petroleum reports.”

Soaring US production has ensured that there is an abundant oil supply, undermining steps taken by the Organisation of the Petroleum Exporting Countries (OPEC) and Russia to bring down excess supply.

On Tuesday, the US Energy Information Administration (EIA) revised the crude production forecast by more than 120,000 barrels per day (bpd) to 11.17 million bpd by the fourth quarter of this year.