Asian stocks opened lower early Tuesday after news of rising Iraq oil production pushed crude back below $30 a barrel, snapping a big two-day rally. Japan's Nikkei slumped 2.5 percent, South Korea's KOSPI 0.9 percent and New Zealand's NZX fell 50 0.3 percent.  Singapore's STI was up 0.2 percent. Australia is closed for Australia Day.

In the U.S., the Dow Jones Industrial Average fell 1.3 percent while the Standard & Poor's 500 and Nasdaq composite both declined more than 1.5 percent.

The U.S. and global crude oil benchmarks both fell below $30 a barrel before closing at $30.34 and $30.50, according to Reuters. They had jumped to more than $32 on Friday as traders judged a long, sometimes steep slide as overdone and on speculation major central banks would calm or support financial markets. The European Central Bank last week said it may adjust monetary policy in March, helping both stocks and oil, while the U.S. Federal Reserve and Bank of Japan hold meetings this week after a turbulent start of the year.

Crude has fallen from over $100 a barrel in mid-2014 — crossing $40 in December and $30 at the start of the year — amid slowing growth in China, rising production in the U.S., Saudi Arabia's refusal to cut production and Iran's return to oil markets after the loosening of economic sanctions. On Monday, state-owned Saudi Aramco said it will continue to invest in production capacity and can survive low prices for an extended period, as reported by Bloomberg. Meanwhile, Iraq said its production rose to a record in December and may be on the way to higher output this year, Reuters reported.

"Today is all about oil," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. "Better oil markets Thursday and Friday led to better equity markets. A $2 retracement in oil today, it's not surprising to see a retracement in the equity indices."

Cheap oil is forcing many oil producing companies to cut jobs, spending and investment, hurting the many businesses that supply the industry. 

"The macroeconomic reality is catching up to equity valuationsyou’re seeing folks say, 'I'm going to take my winnings and get out of the way for a while,'" said Jeff Buetow, chief investment officer at Innealta Capital in Austin, Texas.

Those investors may stay away for a while, amid slow growth in China and Europe and speculation oil will continue to decline.

“Obviously investors are working through some potentially difficult issues in their minds about the state of the world economy,” said John Carey, a Boston-based fund manager at Pioneer Investment Management Inc., which oversees about $230 billion, as reported by Bloomberg. “It might be a while before we emerge from this period of uncertainty.”