BP’s CEO warned that we may have seen ‘peak oil’ and said demand may never fully recover from its coronavirus crash: ‘I would not write that off’

BP CEO Bernard Looney. REUTERS/Toby Melville
  • Energy giant BP’s boss expects to see a sustained impact on crude consumption even after the coronavirus outbreak passes.
  • In an interview with the Financial Times, CEO Bernard Looney said we may have already seen “peak oil.”
  • “It’s not going to make oil more in demand. It’s gotten more likely to have oil be less in demand,” he said.
  • Only last year, BP predicted that oil consumption would grow over the next decade before reaching its peak in the 2030s.
  • Visit Business Insider’s homepage for more stories.

BP’s CEO warned that the impact of coronavirus on crude oil consumption will last well after the pandemic, and that demand may never fully recover, in an interview with the Financial Times.

Bernard Looney, who took over from former chief executive Bob Dudley in February, told the FT he believes the coronavirus crisis is “adding to the challenges of oil in the years ahead,” against a backdrop of travel bans and nationwide lockdowns that have led to a rapid drop in oil consumption.

Prior to the crisis, consumption levels were at about 100 million barrels per day, Looney said.

This was the BP CEO’s first formal interview after oil prices plunged below $US0 for the first time in history.

“It’s not going to make oil more in demand. It’s gotten more likely to have oil be less in demand,” Looney told the FT, while pointing out that working from home and a fall in inessential travel could endure long into the post-pandemic era.

“I don’t think we know how this is going to play out. I certainly don’t know,” he was quoted as saying. “Could it be peak oil? Possibly. Possibly. I would not write that off.”

Read more:

A Wall Street expert lays out how the stock market’s ‘downright terrifying’ surge within this crisis may be laying the groundwork for another 32% crash

Oil experts remain cautious on the commodity’s price fluctuations. Analysts at Goldman Sachs forecast that demand of 2-3 million barrels per day could be wiped out from air travel, and a complete recovery in demand might not be possible before the third quarter of 2022.

Other analysts at the investment bank warned that a mixture of fragile demand, oversupply, and a storage shortage could lead to oil falling below $US0 again in May.

Last year, the British oil giant said it expected consumption to increase over the next 10 years before peaking in the 2030s.

Similar to other energy majors, BP posted a 66% drop in its first quarter profits last month, hurt by the pandemic biting into the sector.

Read more:

BANK OF AMERICA: Investors should buy these 12 cheap stocks to bet on the coming US recovery – but they should steer clear of these 8 competitors

Looney told the FT the pandemic had strengthened his “personal conviction” to shift strategies and undertake more low-carbon energy investments as part of the oil giant’s new focus to become a net zero emissions company by 2050.

Looney reportedly observed that ventures into renewable energy have gained attraction in funding opportunities. “It’s the model that is increasingly respected and admired by investors as being resilient and having a different risk profile,” he told the news agency.

He also acknowledged that he knew there is “significant” interest in BP’s next move, and added that it would evaluate dividend policy quarter-by-quarter. He did not comment on the direction the company would take.

BP did not immediately respond to a request for comment by Markets Insider.