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A flurry of intensifying risks could trigger an energy market `crunch` over the coming months. according to the chief executive of BP.
His comments come at a time when energy market participants expect U.S. sanctions on crisis-stricken Venezuela. as well as OPEC- led production cuts. to offset a potential supply glut this year.
When asked whether production cuts from the so-called OPEC+ coalition were likely to help stabilize oil prices. Dudley replied: `Well. there`s a lot of variables here and there`s a lot of things that could lead to a real crunch.`
Speaking to CNBC`s Dan Murphy at an energy forum in Cairo. Egypt. Dudley cited `tragic circumstances` in Venezuela. uncertainty in Libya. rising production levels from the Permian Basin and the impact of U.S. sanctions on Iran.
`So. the OPEC+ countries agreed to reduce production in the first quarter. we don`t even really have data from it. We will have to see what the data looks like but the markets feel tight to me.`
`We plan BP on a sort of fairway. which I think is good for the world. between $50 a barrel and $65. That`s good for producers and consumers.` Dudley said.
Brent Crude. the international benchmark for oil prices. was trading at $61.90 a barrel Tuesday morning. up 0.6 percent. while West Texas Intermediate (WTI) stood at $52.68. 0.5 percent higher.
`Unintended consequences`
OPEC and its allied producers. including Russia. agreed to impose output cuts from the beginning of January in order to prevent a global supply overhang.
The Middle East-dominated group began capping supply in partnership with Russia and several other nations in January 2017 to end a punishing downturn in oil prices.
The oil industry is generally optimistic that the measures imposed by OPEC and non-OPEC members could help balance the energy market over the coming months. But. some are concerned supply-side risks were not receiving enough attention.
When asked whether he would like to see OPEC and non-OPEC producers taking further action to support the energy market at their next meeting in April. Dudley replied: `I think as an international oil company subject to the markets. I shouldn`t have a view about that actually.`
`I think what is important is when prices are too high or too low. it leads to all kinds of unintended consequences.` he added.
