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.”
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.