Market News & Analysis
Low oil prices could remain for 3 years
City Index January 22, 2015 12:26 PM
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.
Find out about commodities trading and learn CFD strategies at City Index
More From City Index
- Companies reporting for week starting Monday 1st May 2017 April 28, 2017 9:13 AM
- Companies reporting for week starting Monday 24th April 2017 April 21, 2017 11:00 AM
- See More
From time to time, GAIN Capital Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.