Oil price rut may continue for five years, BP boss warns

BP IS braced for crude prices to stay around $50 a barrel for the next five years, in a major revision to its forecasts less than 12 months after the oil major said it expected prices to return to $60 a barrel in 2017.

Oil prices peaked above $56 a barrel earlier this year but that level reignited the US shale industry, triggering fresh flows that dragged crude down again.

Bob Dudley, BP’S chief executive, said the market price was likely to remain in a rut between $45 a barrel and $55 for the next five years – but the group would continue to cut costs so that it broke even at a $30 market price.

“At an oil price of $50 a barrel and a break-even price of $30, the company will be generating a lot of cash,” he told The Daily Telegraph.

The latest oil price relapse slashed BP’S profits for the second quarter by more than half to $684m (£517m) compared to $1.5bn in the previous three months and $720m a year ago.

The oil group took a $750m writedown after abandoning its 50pc stake in a major project in Angola because of low prices.

In addition to lower prices, Big Oil will have to contend with a faster than expected uptake of electric vehicles.

“This will not be an overnight transition – it will take a long time,” said Mr Dudley.

“We’re going to position BP to make sure that we’re ready… but we’re probably not going to be making very large investments until we’re really sure.”

Last week Ben van Beurden, the boss of Royal Dutch Shell, said he would reveal plans to tap into the boom in electric vehicles and added that his next car would be an all-electric one.

“My wife and I have been driving hybrids for the last 12 years,” Mr Dudley said. “I’m not trying to one-up Ben… but we’ve been driving hybrids for quite some time.”