BP chief expects oil markets to balance this year

Increasing demand for petroleum products in China, North America and Europe will bring crude markets into balance this year, and push prices as high as $60/bl in 2017, BP chief executive Bob Dudley said.

But Dudley said it will "take a while" before crude prices increase significantly, in part because of the time it will take the world to work through high inventories built up in recent years. Crude prices are likely to remain around $50/bl this year, Dudley said, an estimate that roughly aligns with the latest forecasts from the US Energy Information Administration.

"We are not expecting the days of $100/bl oil to return anytime soon, so we must maintain our discipline and continue to improve our productivity," Dudley said today in Washington, DC, at an event hosted by the Economic Club, a business forum.

Energy companies have been forced to "quickly adapt or perish" in response to the shale drilling boom and lower prices, he said. BP cut its capital expenditures and laid off employees when oil prices fell in 2014. These changes were "painful adjustments," he said.

Dudley spoke hours before polls close in the UK on the voter referendum over whether to exit or remain in the EU. Dudley today reiterated BP's opposition to leaving the EU, which he said could lead to economic turmoil.

"I think you will see all kinds of dislocations. I think there will be job losses in London. I think the [British] pound would move around unpredictably," Dudley said.

Dudley said that Europe needs a "great deal of reform" but that the UK could better drive those reforms by remaining within the EU.

He also raised concerns with the business environment in the US, which he said has an "increasingly tangled web" of regulations and seems "increasingly litigious." BP earlier this month agreed to pay $175mn to settle allegations that it misled investors in the wake of the 2010 Deepwater Horizon explosion, which spilled an estimated 3.18mn bl of crude.

Dudley also expressed concerns with political gridlock in Washington. The US Congress for the last year has been unable to enact a modest bill that would expedite permitting of pipelines and LNG export terminals. Congress appears highly unlikely to tackle more contentious energy issues, such as finding new funding for infrastructure or enacting climate change legislation.

"The US political system is demonstrating an increasing inability to come together and get things done, and that is making it harder for policymakers to think long-term and plan for the future, both of which are essential to solving the problems we face."

Dudley repeated BP's support for governments to put a price on carbon emissions, which he said would be the "most important element" toward getting the world to transition to a lower-carbon environment.