Saudi Arabia, the world’s biggest oil exporter, has spelled out details of the dramatic increase in its production that prompted Monday’s huge falls in global stock markets and is regarded as a targeted attack on the US shale oil industry.

The state-owned oil firm Saudi Aramco said in April, when a three-year Opec deal with Russia expires, it would increase output from 9.7m barrels per day (bpd) to 12.3m, flooding the market and bringing oil prices lower.

On Monday, Brent crude plunged more than 30% to its lowest levels since February 2016. The drop was the biggest one-day percentage decline since the first Gulf war began in 1991.

Within hours of the Saudi statement, Occidental Petroleum, the biggest shale oil producer in the US, slashed its dividend payout from 79 to 11 cents a share.

The Houston-based company, which spent $57bn with mostly borrowed funds to buy the oil and gas rival Anadarko Petroleum last year, announced it would also cut investment this year to between $3.5bn and $3.7bn, from $5.2bn to $5.4bn in 2019, to cope with an expected drop in operating profits and a 50% dive in its share value after the price crash.

“Due to the sharp decline in global commodity prices, we are taking actions that will strengthen our balance sheet and continue to reduce debt,” the company said.

Several of the largest shale oil producers are heavily in debt and known to be unprofitable with an oil price below $50 a barrel.

John Forsythe, the chief global strategist at Boston-based BrightSphere Investment, said: “Continuing downward price pressures on the heavily leveraged US oil and natural gas industry could lead to missed debt payments.

“That would have an outsized impact on the US economy given that the shale industry, for example, has accounted for as much as 10 percent of economic growth in recent years and the broader oil and natural gas industry supports more than 10 million jobs.”

Oil prices had rebounded by 8% on Tuesday after Russia signalled that talks to limit supplies in line with the Opec oil cartel, which broke down last Friday and triggered the biggest price drop in nearly 30 years, were still possible.

It was the breakdown of talks with Russia at the weekend that prompted Saudi Arabia to turn on the taps and push down the price. The talks had been expected to agree production cuts, to maintain prices at a time when the global economy is under increasing pressure.

The price of Brent crude rose $2.80 to $37.16 a barrel by lunchtime after investors were reassured by the Russian intervention and other moves by Japan and the US. Tokyo announced a second $4bn economic stimulus package, while Donald Trump said he would push for tax cuts to tackle the economic spillovers of the coronavirus.

The Russian oil minister, Alexander Novak, said he did not rule out joint measures with Opec to stabilise the market, adding that the next meeting to discuss production levels and prices was planned for May-June.

However, Saudi Arabia’s energy minister told Reuters he did not see a need to hold a meeting in May-June if there was no agreement on what measures should be taken to deal with the impact of the coronavirus on oil demand and prices.

“I fail to see the wisdom for holding meetings in May-June that would only demonstrate our failure in attending to what we should have done in a crisis like this and taking the necessary measures,” Prince Abdulaziz bin Salman said.

Oil company share prices recovered some of their Monday losses, with BP adding 11% to close at 333p and Shell up 3.7% to £13.66. Before this week’s stock market collapse, Shell’s share price in London was above £16 a share.

Analysts at RBC said: “Price wars and pandemics are nothing new to the commodity markets, but both occurring simultaneously is something we have yet to witness in our careers.”

They said without a deal between Russia and the Opec countries it was difficult to see where the oil price would settle.

The last time the price of Brent crude dropped below $40 a barrel in 2016, the US shale oil boom was in full flow and global oil markets were flooded with supply.