Oct. 10 (UPI) -- BP plans on oil prices 25 percent below current levels after short volatility period, their CEO said on Wednesday.
BP is assuming crude oil prices may reach levels of $60 to $65 per barrel, or about a quarter off from current levels, after a short-lived period of "extreme volatility," in part as supply-demand fundamentals not only show a balance but also because major disruptions could only cause dislocation for a while.
The CEO of BP, Bob Dudley, made the comments Wednesday during a presentation at the Oil and Money Conference in London where he focused his speech on renewables, stressing that despite their fast projected growth to one-third of the world's energy consumption by 2040, oil and gas have "a crucial role to play" to take care of the remaining two thirds.
"We're very disciplined in our company, really disciplined with our capital spending and we will continue to be, and not planning on an $80 future. We're planning on a cycle of $60-$65. It's a bit up from the $55 we said last year," said Dudley, according to a report by S&P Global.
In other comments on the sidelines of the presentation, he explained that current oil prices are only likely to remain high for a period of extreme volatility -- caused by Iranian oil sanctions and concerns about Venezuela that will not last long.
The U.S. has tools to control potential Iranian oil supply declines through waivers it may grant as nuclear program-related sanctions are scheduled to be restored on Nov. 5, and even a disruption in Venezuela would only cause "dislocation" for a while, Dudley told CNBC.
Saudi Arabia has additional capacity and Russia is also increasing capacity, he added.
In the case of Venezuela, "it may be a dislocation for a while, you got the Permian (...) within a year that will also bring additional supplies."
According to EIA forecasts, the United States will increase output to 11.7 million barrels per day next year compared with 10.7 million this year due to Permian basin production coming online.
Brent futures were trading Wednesday morning at $84.58/barrel.
He quoted the IHS Markit Vice Chairman Daniel Yergin saying in an analysis of the current volatility that "actually the markets appear to be in balance, but emotionally not stable."
"I think that is playing into the markets," Dudley said.