BP takes hit of up to $17.5bn as it forecasts cheaper oil

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BP says it expects oil prices to be lower than expected from now until 2050 as governments speed up plans to cut carbon emissions in the wake of the coronavirus pandemic.

The oil giant said that because of this it would revise down the value of its assets by as much as $17.5bn (£13.8bn).

It expects the price of Brent crude to average $55 a barrel.

As a result, BP said it would have to become a “leaner, faster-moving and lower cost organisation.”

Last week, the firm announced plans to cut 10,000 jobs following a global slump in demand for oil.

Countries across the globe have ordered people to stay indoors and not travel as a result of the coronavirus pandemic, which has caused a slump in demand for oil.

As a result, the cost of oil fell to less than $20 a barrel at the peak of the crisis, less than a third of the $66 it cost at the start of the year.

For a brief period buyers were actually paid to take delivery of crude oil amid a shortage of storage.

The price has since partly recovered to around $37 a barrel.

BP says it has “a growing expectation that the aftermath of the pandemic will accelerate the pace of transition to a lower carbon economy and energy system, as countries seek to ‘build back better’ so that their economies will be more resilient in the future”.

Source: BBC

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