BP chief Bob Dudley sees oil at $55-70 a barrel in coming years

Istanbul: Oil should hover at around $55-70 a barrel for the rest of the decade as the energy industry undergoes "profound changes" after crude prices came under heavy pressure in recent years, BP chief executive Bob Dudley said on Tuesday.

Dudley was speaking at the World Energy Congress in Istanbul, where a pledge on Monday by Russian President Vladimir Putin to work with OPEC in imposing output curbs had pushed oil prices up to their highest level for a year.

US benchmark West Texas Intermediate for November delivery jumped $1.54 to $51.35 a barrel on the New York Mercantile Exchange, the highest closing price since July 2015.

Dudley predicted that the "price of oil will cycle between $55-70 (a barrel) for the rest of the decade unless there is a price squeeze."

He said stable and reasonable prices were in everyone`s interests.

"It`s not good for the world to have prices at $25 (a barrel), not good to have (them) at $100," he said.

He said around one trillion dollars of energy projects have been cancelled or deferred around the world due to the recent low oil prices.

"We are going through a time where supply has outstripped demand," Dudley said, with new sources of supply coming at a time when the previously extraordinary demand growth had slowed.

"These are profound changes that mean we need to be competitive in a way that`s different from the past."

He said fossil fuels would remain vital, despite the drive to grow renewable energy from its current proportion of three percent of the world`s energy mix.

"Even if renewables were to grow faster than any fuel has done, they are unlikely to contribute more than 15 percent of the total energy mix by 2035," he said.

Dudley said it was gas that should be seen as the replacement for coal as pressure grows to fulfil climate change obligations.

"We`ve all heard of big oil. But this is the age of big gas," said Dudley. 

He said BP`s portfolio consisted of 50 percent natural gas now and this would rise to 60 percent by the end of the decade with new projects. 

Reports said earlier this month Iran`s state-owned oil company had sold condensate to BP for the first time since the easing of sanctions following the 2015 nuclear deal.

Dudley was however cautious on the prospect of BP making a return to Iran, the country which was the birthplace of what was to become BP with the formation of the Anglo-Persian Oil Company in 1908.

"Our original roots did start there.... We have to be very careful," said Dudley, adding there had been "confusing signals" over the lifting of sanctions. "We don`t have any plans right now," he added.

"They need to be very competitive before oil companies will step in and invest," he added.