Royal Dutch Shell chief executive Ben van Beurden has told the BBC that a recovery in the price of oil is hard to foresee.
Speaking on BBC Radio 4’s Today programme, he said: “It is a very, very volatile business in terms of supply and demand. The oil price responds to very small mismatches between supply and demand.”
When asked where oil prices may go next, he said: “The honest answer to that is I don’t know.”
In July 2014 oil was at more than $105 a barrel with average prices of unleaded and diesel at 131.6ppl and 136.1ppl respectively. Now oil is less than $50 a barrel with average unleaded and diesel prices both below 110ppl. Van Beurden said this fall was “on the back of just a few per cent of oversupply, and it shows how inelastic the whole system is, and simply because oil is so cheap – it’s not as if demand is going to respond.”
He also pointed out that fuel becoming cheaper would not tempt consumers to use more of it, as can happen with other products. “People don’t drive to work twice because it’s more economical to do so” than it was before, he explained.
Demand for energy, North American shale oil production, Opec policy and industry costs would help inform where oil will go in the future, he said.