Uncertainty surrounding Irans oil industry ahead of forthcoming US sanctions could prompt extreme volatility for oil prices, BPs chief executive told CNBC Wednesday.
I think its going to be 45 days of extreme volatility, it could spike up, it could also go the other way, he told CNBCs Steve Sedgwick in London.
Dudleys comments come at a time when oil market players are closely watching what happens when US sanctions on Irans oil industry come into force on November 4.
Its hard to be precise over how much of Irans production will be affected by the sanctions. It largely depends on whether the countrys oil-buying customers are afraid of secondary sanctions from the US if they do business with Iran.
BPs competitor Total announced in August that it was pulling out of a giant oil and gas project in the Islamic Republic. But BP and Serica Energy were granted a new license Tuesday to run a North Sea gas field partly owned by Iran showing the US is willing to make some exemptions to the reach of the sanctions.
If waivers were granted to others, to big oil consuming countries, you could see it (the price) go down, theres a lot of uncertainty right now, Dudley said.
Some analysts predict as much as 1.5 million barrels per day could be removed from the market, an event that could cause prices to rise further.
On Wednesday, Brent crude futures were trading at $84.96 per barrel while U.S. West Texas Intermediate was trading at $74.92.
This article provided by NewsEdge.