Bernard Looney, the Chief Executive of BP, has said that he expects a strong and long-lasting recovery in the demand for crude oil, combined with continued restraint from US shale producers.
Speaking in St. Petersburg to Bloomberg News, Looney said:
“There is a lot of evidence that suggests that demand will be strong, and the shale seems to be remaining disciplined. I think that the situation we’re in at the moment could last like this for a while.”
The CEO also said that he believed the vaccines were working, but needed to be distributed to more places.
Looney’s view resonates with those of many other top executives in the oil industry, but it contradicts the more cautious views held by many prominent players in OPEC. Prince Abdulaziz bin Salman, the Energy Minister of Saudi Arabia, recently said there should be evidence of a resurgence in demand before increasing supply, while Mohammad Barkindo, the OPEC Secretary General, has pointed to the unpredictable and persistent nature of the coronavirus pandemic.
With Brent crude recently closing above the $70 threshold for the first time since 2019, the markets would seem to support a degree of optimism.
Looney also believes there will not be a quick return of US shale production, which, combined with the reopening of many western economies and Chinese economic growth, should help run down the global stockpiles of crude oil. Indeed, BP, which also makes the Castrol lubricant range, has shale oil operations in the US, but its activity there is still below pre-pandemic levels, despite adding more rigs recently.