Crude oil slump could linger like 1986’s decline – BP CEO

HOUSTON (ICIS)–The most recent slump in global crude oil prices bears similarities what happened in 1986 and the few years afterward, the CEO of BP said on Tuesday.

Speaking at IHS CERAWeek, Bob Dudley pointed to a flood of oil supply that hit the market in 1986 from areas such as the Alaska north slope and Mexico as being culprits in dropping crude prices that year and keeping them low for several years after. Crude prices fell more than 60% from levels about $30/bbl and did not consistently settle above that level until 2000.

The BP CEO correlated that price decline to one that has beset crude oil since late 2014 due to surging shale oil production in the US and North America.

“It does feel like the world is awash in oil,” Dudley said.

The chief executive said that BP is being “very, very cautious” about crude prices going forward, and that the UK-based producer does not see a quick return to the $100/bbl levels of the last few years.

A wave of consolidation does not seem to be in the offing yet as it was in crude downturns such as 1998 when BP took over US-based producer Amoco, Dudley said.

IHS CERAWeek continues through Friday in Houston.