July 11, 2020, 20:55

BP Chief Calls US ‘Market Without Brain’ for Renewing Record Oil Output

BP Chief Calls US ‘Market Without Brain’ for Renewing Record Oil Output

LONDON (Sputnik) – The United States is acting as “a market without a brain” as it responds to prices and increases its oil output to record highs, Bob Dudley, the chief executive officer of the UK multinational BP Group, said Tuesday.

“The United States is probably the only country in the world that completely responds to market signals. It’s like a market without a brain. Nobody says this is what we will do, it just responds to price signals,” Dudley said at the International Petroleum Week conference in London, when asked about US beating its record in oil production yet again and complaining of high oil prices.

READ MORE: Oil Market to Lose Almost Third of Venezuelan Crude due to US Sanctions — Report

When asked about US President Donald Trump’s recent tweet complaining of oil prices being “too high” at around $67 per barrel, Dudley argued that it could be a signal for extension of US sanctions against Iran.

“It’s amazing. I don’t tweet but I saw that. It struck me as the sort of a signal to extend Iran sanctions, but I have no idea about the insight of this,” he said.

However, given the nature of shale oil, the high rate of US oil production may not continue for long, the BP chief said.

“The big question — longer-term for five, 10 years — is whether shale will continue going up, up, up or level up because of the nature of these fields that decline fast, it makes huge difference for the overall balance,” he added.

UK oil and gas multinational BP forecasts oil prices to stand between $50 and $65 per barrel over the next 3-4 years, company CEO said.

“We plan BP’s [activity based on] the price of $50-$65. That’s the planning of the company, but it could go up and down. As long as we keep our discipline, that’s how we see the future for the next 3-4 years,” Dudley said at the International Petroleum Week conference in London.

For all global oil producers, prices between $50 and $70 per barrel are most convenient, according to Dudley.

“The world works well in the fairway of $50-$70 per barrel, the world can work with production in the state of balance,” the group chief executive said.

On Friday, oil prices fell just below $67 per barrel after the United States hit another record in oil production by pumping 12 million barrels per day, undermining efforts of other major oil producers, including Saudi Arabia and Russia, at limiting their production to stabilize the market.

Increased US output comes just as the Organization of the Petroleum Exporting Countries (OPEC) revised down its assessment of the oil demand growth in 2019. According to OPEC’s February report, oil demand growth is expected to reach about 1.24 million barrels per day, due to adjusted economic forecasts.

Sanctions on Venezuela

Sanctions against Venezuela and Iran can spur quick oil price changes and cause supply deficit, Bob Dudley said.

“If we talk about supply gap, today Venezuela is declining rapidly due to the gravity [of the crisis]. Are there, are there not sanctions on Iran? These things are more likely to move the [oil] price quite quickly and cause supply gap,” Dudley said at the International Petroleum Week conference in London.

Earlier in February, the International Energy Agency (IEA) remarked that US sanctions against Venezuela were complicating exports for Caracas. Iranian oil production fell by 520,000 barrels daily in December, compared to October, amid renewed US sanctions, the IEA said last month.

In February, the IEA increased its 2019 supply growth estimates for producers that are not part of the Organization of the Petroleum Exporting Countries. The organization cited higher US production as the reason for revision.

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