Low oil prices could remain for 3 years

Low oil prices could remain for up to three years, according to the head of BP.

Bob Dudley, group chief executive and a director at the British oil giant, explained to BBC Business editor Kamal Ahmed in Davos that the company was preparing for a sustained period of low oil prices. He explained that this could potentially have a knock-on effect to UK petrol prices and said if the trend was to continue then petrol could dip below £1 per litre.

It is a much bleaker story in the oil industry if the predictions come to fruition. A continued drop in oil prices could see job losses and falling investment in the North Sea oil industry. It would mean companies would have to reduce supply to stimulate the market and eventually push prices back up.

Mr Dudley told the BBC: "Companies like us, at BP, we're going to need to rebase the company based on no guarantees at all that the price will come back up. We have go to plan on this [price] being down, and we don't know exactly what level, but certainly a year, I think probably two and maybe three years."

The price of oil has taken a sharp dive in recent months. From 2010 to mid-2014, the average price of a barrel of oil was around $110 (£72.58) but the remainder of last year saw prices plummet. Brent crude oil has now fallen to around $48 a barrel while US crude is also down to $47.

Falling oil prices has been the main topic for conversation in recent meeting of the Organization of Petroleum Exporting Countries (Opec). Members of the cartel met in Vienna in November to discuss a potential cut in production to boost prices. Nations such as Saudi Arabia and non-member Russia opposed a move of this ilk and the current production levels were maintained.

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