BP boss Bob Dudley has said that the price of oil will be in a slump for sometime, comparing the current crisis to that of 1986, when the price of oil dropped from US$30 to $10 a barrel.
Dudley said: “The fundamental supply and demand does remind me of 1986 a bit, where we could go into a period in this decade of lower oil prices. It will be a long time before we see $100 again.”
gCaptain reported Bloomberg as saying that the price of New York crude futures will average $74 in 2016 and $75 in 2017.
The current oil price remains less than half its June high of $107, at $50.82 per barrel.
Commenting on China’s oil situation, Dudley said: “We do have stocks filling up around the world. China [which] is still growing, for sure, it’s just not as much as it did. All these things have led to lots of stocks building up and you may start seeing it filling up some ships. And when, traditionally, that happens it can go on for quite a while.”
In response to the drop in oil prices, BP has pledged to cut around $2 billion of planned spending.
Dudley concluded by saying that it will take a while for lower investment to feed into the oil market since the industry works to a long cycle.