The oil market is “pretty pessimistic” about OPEC reaching a deal to cut production, BP Plc Chief Executive Officer Bob Dudley said.
Oil prices will probably stay around current levels if the Organization of Petroleum Exporting Countries fails to implement the deal it reached in Algiers in September to limit output, Dudley said in an interview on Bloomberg Television from Riyadh. The producer group is meeting in Vienna on Nov. 30.
“People are pretty pessimistic right now about a potential agreement, you see that in the price,” Dudley said. If the talks fail, prices “will stay around the level we’re at.”
Benchmark Brent crude rallied to nearly $54 a barrel in early October after the OPEC deal in Algiers, which ended a two-year policy of pumping without limits. Prices have since slumped to $45 as doubts spread about the implementation of the agreement. “These are low levels for countries in OPEC,” Dudley said.
OPEC nations embarked on a final diplomatic effort to secure a deal on oil cuts with the three biggest members – Saudi Arabia, Iraq and Iran – still at odds over how to share the cuts, according to a delegate familiar with the talks. Iraq says it is producing about 200,000 barrels per day more oil than OPEC acknowledges, and Oil Minister Jabbar Al-Luaibi sought an exemption from joining in cuts in Algiers. Dudley said statements from Al-Luaibi “confuse me a bit, that’s not where I’d expect the statements to be.”
The Algiers agreement aims to cut OPEC’s production to between 32.5 and 33 million barrels per day. OPEC members pumped more than 34 million barrels per day in October, data compiled by Bloomberg show. Iran, Libya and Nigeria negotiated exemptions from cuts in Algiers to recover production they had lost under sanctions and security issues, leaving fewer countries to share cuts of as much as 1.5 million barrels per day.
“It will surprise me if one or two countries or Saudi Arabia cut for that amount,” Dudley said. “So I think they will try to reach some consensus, I’m sure that’s the objective.”
Supply and demand are “generally in balance” in the market, Dudley said, due to demand growth in China, Europe and North America. Nevertheless, there is a “tremendous amount” of oil in storage that will take a long time to draw down, he said. Global oil production could peak in the late 2030s or early 2040s, he said.