Former BP CEO Bob Dudley says oil price tied to China's growth, expresses 'surprise' at Bernard Looney's abrupt exit

When asked about the likelihood of oil prices reaching $100 per barrel, Dudley expressed uncertainty, stating that the possibility of oil reaching $100 per barrel by the year end depends on the trajectory of Chinese economic growth, which remains uncertain. (Image credit: https://www.ogci.com)

Former BP CEO Bob Dudley regarding the surge in oil prices, pointed out that they have been steadily increasing due to a shortage within the oil and gas sector. He emphasized that a significant factor influencing this trend is the pace of economic growth in China.

"They have been creeping up. There is a shortage in the oil and gas industry. Lot of it depends on the pace of growth, faster or slower growth, in China. This is the major factor at the moment," said Dudley speaking exclusively with CNBC-TV18.

When asked about the likelihood of oil prices increasing further and reaching $100 per barrel, Dudley expressed uncertainty, stating that the possibility of oil reaching $100 per barrel by the year end depends on the trajectory of Chinese economic growth, which remains uncertain.

Crude oil prices continue to be impacted by concerns about demand due to macroeconomic challenges. After experiencing a recovery in recent months, they came close to reaching $100 per barrel last week, primarily because leading producers Saudi Arabia and Russia reduced their market supply by millions of barrels. Oil prices were at $87.62 per barrel on October 4.

Dudley, who stood down as BP CEO in 2020, on being asked about concerns regarding demand destruction at $100 per barrel, acknowledged that demand destruction is a possibility, similar to what might occur with natural gas prices, and emphasized they are not particularly worried about demand destruction, and cited increased industrial activity in the United States and apparent growth in China.

"There will be demand destruction just like it will be for natural gas prices. I am not worried about demand destruction because industrial activity is up in America, and seem to be up in China," said Dudley.

Regarding the upcoming COP28 climate talks in the UAE, Dudley, who serves as the Chair of the Oil and Gas Climate Initiative (OGCI), an initiative of energy companies dedicated to spearheading the industry's efforts to combat climate change and advance towards a net-zero future, expressed confidence that various industries, such as oil and gas, steel, aluminum, and transportation, will not only establish targets this time but also make firm commitments and execute programs with concrete objectives aimed at reducing emissions.

Dudley further said the focus will also extend to leveraging the capabilities of the oil and gas industry, such as deploying satellites for global methane emissions monitoring.

"For many years oil and gas and energy industries were excluded from COP discussions. Now, I would expect them to be central. Not only, oil and gas, steel, aluminium and transportation companies to be part of it all laying out not just targets, but commitments and programmes and actionable targets to reduce emissions. It is about harnessing the Oil and gas industiry to do things like put up satellites to measure methane gas emissions around the world. It is going to be a diffeent COP," the former CEO of British energy major said.

Speaking on the recent World Bank projection of a 6.3 percent growth rate for India, the country labeled as one of the fastest-growing and resilient economies, and his overall outlook for India, Dudley expressed an optimistic stance regarding India's growth potential, said his optimism stems from factor such as India's favorable demographics with a higher proportion of young individuals compared to China. Furthermore, Dudley believed that India is increasingly integrating into global supply chains, and being a neutral nation, it possesses distinct advantages in this regard.

He said, "I have always been bullish on India in growth prospects. India is finding place in the world in the supply chains in the world. India as a neutral nation has its advantages", and also added, "India needs to do what it is doing currently to grow faster."

Commenting on chief executive Bernard Looney's abrupt resignation from BP due to alleged undisclosed relationships with colleagues and its potential impact on his work at the company and appointments as CEO, Dudley responded by saying, "It is a big surpise and sad it has happened," and added, "I knew nothing about these allegations, my deputy CEO did not know and the board did not know."

BP announced on September 12 that Looney resigned "with immediate effect" after admitting he had not been "fully transparent" about historical relationships with colleagues. Looney stepped down from his role in less than four years.