Oil

BP CEO Bob Dudley expects oil prices to be more resilient this year

Key Points
  • "As we look it, it feels like the markets will be firmer," BP CEO Bob Dudley told CNBC on Tuesday.
  • OPEC and its allied producers, including Russia, agreed to impose output cuts from the beginning of January in order to prevent a global supply overhang.
  • Meanwhile, most analysts expect U.S. sanctions targeting Venezuela's crude industry to sharply limit oil transactions between Caracas and other countries.
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BP planning for oil price of $50 to $65 a barrel, CEO says

Oil market conditions should improve over the coming months, BP CEO Bob Dudley told CNBC on Tuesday.

His comments come at a time when energy market participants expect U.S. sanctions on crisis-stricken Venezuela, as well as OPEC-led production cuts, to offset a potential supply glut this year.

"As we look it, it feels like the markets will be firmer," Dudley said, when asked for his energy market forecast for 2019.

"I couldn't predict the oil price but we are planning BP between $50 and $65," he added.

Brent crude, the international benchmark for oil prices, was trading at $62.22 a barrel Tuesday afternoon, down 0.4 percent, while West Texas Intermediate (WTI) stood at $54.30, down 0.5 percent.

'A lot of uncertainty'

OPEC and its allied producers, including Russia, agreed to impose output cuts from the beginning of January in order to prevent a global supply overhang.

The Middle East-dominated group began capping supply in partnership with Russia and several other nations in January 2017 to end a punishing downturn in oil prices.

"I think there's a lot of uncertainty (in oil markets) we're looking at a high volatility for this year," Joseph Gatdula, head of oil and gas at Fitch Solutions, told CNBC's "Squawk Box Europe" on Tuesday.

"All that uncertainty is based on a few known events that we have, the Iranian sanctions waivers and the Venezuelan sanctions but also the OPEC-plus cuts, those are expected to go for the first six months of the year — and then it's uncertain what's going to happen," he added.

Bob Dudley, chief executive officer of BP Plc, pauses during the opening day of the 7th Organization Of Petroleum Exporting Countries (OPEC) international seminar in Vienna, Austria, on Wednesday, June 20, 2018.
Stefan Wermuth | Bloomberg via Getty Images

The oil industry is generally optimistic that the measures imposed by OPEC and non-OPEC members could help balance the energy market over the coming months.

Meanwhile, most analysts expect U.S. sanctions targeting Venezuela's crude industry to sharply limit oil transactions between Caracas and other countries.

"The cost of producing a barrel of oil will remain at an economically viable level in the foreseeable future, even if prices fall below $50 a barrel just like they did less than two months ago," Tamas Varga, senior analyst at PVM Oil Associates, said in a research note published Tuesday.

Late last month, the U.S. imposed sweeping sanctions on oil firm PDVSA.

The measures against Venezuela's state-run oil company are the strongest yet against President Nicolas Maduro, who has overseen an economic collapse and an exodus of millions of Venezuelans in recent years.