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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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BP CEO: $80 Oil Is Unhealthy For The World

Oil prices at $80 a barrel are too high and unhealthy for the world today, Bob Dudley, the chief executive of UK supermajor BP, said on the sidelines of an event on Friday.

“There’s a healthy price for oil and energy and I believe that balances producing countries and consuming countries,” Quartz quoted Dudley as saying on the sidelines of the conference One Young World in The Hague. 

“In my mind, it’s somewhere between $50 and $65 a barrel. The world can live with this,” Dudley noted.

Emerging and developing economies like India, South Africa, or Turkey are seeing their highest-ever prices of gasoline because their currencies have rapidly depreciated against the U.S. dollar and because oil prices in dollars are high, BP’s chief executive said.

Currently, oil prices are “artificially high” due to Venezuela “defying gravity” and to the U.S. sanctions on Iran, according to Dudley, who said that once those geopolitical events subside, fundamentals will return to rule the market and prices should return back to $60-$65 a barrel.

BP won’t be joining any EU special purpose vehicle designed to keep trade with Iran flowing, Dudley stressed, noting that “I think it’s full of risk.” Related: What Killed The Oil Price Rally?

The concerns of BP’s chief executive that $80 oil is unhealthy for the world are shared by major international organizations such as the International Energy Agency (IEA) and the International Monetary Fund (IMF).

Expensive energy is back and it is threatening global economic growth, the IEA said in its Oil Market Report last week.

Also last week, the IMF slightly downgraded its projection for global growth for this year and next—at 3.7 percent, growth is now expected 0.2 percentage point lower than IMF’s forecast from April this year. The key reasons for the downgrade included trade disputes, geopolitical tensions, and a weaker outlook for emerging economies due to higher oil import bills, among other factors, according to the IMF.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh G Salameh on October 21 2018 said:
    He may be the CEO of one of the world’s oil majors, but Bob Dudley can still make an error of judgement regarding oil prices.

    Between 2011 and 2014 the global economy continued growing despite oil prices ranging from $110 -$115 a barrel until geopolitics intervened and Saudi Arabia decided to flood the global oil market to punish Iran’s economy and try to slow down US shale oil production. This policy failed miserably inflicting huge damage on the global economy and on its own economy being OPEC’s largest producer and exporter.

    Moreover, the current robust fundamentals of the global oil market support an oil price far above $80. This has nothing to do with outages in Venezuela and elsewhere and the forthcoming US sanctions on Iran.

    A viable economic principle is that oil-producing nations should aim to maximize the return on their finite assets to the highest level the global economy could tolerate. The overwhelming majority of OPEC members who account for 40% of global oil production need an oil price above $100 to balance their budgets.

    A $100 oil is good for the global economy. It invigorates the three biggest chunks of the global economy, namely, global investments, the economies of the oil-producing nations and the global oil industry. Mr Dudley must have been aware of the heavy damage the oil price crash in 2014 has inflicted on the global economy and the global oil industry including BP.

    The hiking of the US interest rates by the US Federal Bank is causing an appreciation of the dollar against the currencies of the emerging and developing economies thus making oil imports by these economies more expensive. The answer is then for the US Federal Bank to stop hiking US interest rates. Even the Trump administration is calling for a halt.

    Another reason is persistent doubts by the global oil market about OPEC’s and Saudi Arabia’s spare production capacity.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Blackbag99 on October 22 2018 said:
    I am not sure that the world really gives a flying fun about $80 oil.

    Demand has been pretty resilient in the price run up. In 6 months most of the appreciation drops out of inflation figures.

    I don't share his scepticism, but then he is paid to be prudent. Whereas, I get paid to bet against him.
  • american energy department liars on October 22 2018 said:
    unhealthy for the world?

    shameless fellow. OIl price is unhealty? they want to produce trillions of dollars of junk gadgets.

    Rise the oil price.

    Let them start refurbishing all the crap gadjets they produced last 15 years.

    Let oil price rise to 150.

    there is so many poor people in the oil/mineral exporting countries.
  • Tom on October 26 2018 said:
    High oil prices aren't threatening global growth. Nationalist trade policies, and taxing the poor, and low wages are threatening global growth. The price of fuel and the price of a beer will always be priced in to the market, but the price of labor, taxes on the poor but not the rich, and nationalist trade policies will cause a recession if the Neo-Con's get to keep corrupting the U.S. electorate.

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