BP's Lord Browne sees $40 oil as medium-term average

LORD Browne, the chief executive of oil heavyweight BP, expects crude prices to fall from current near-record levels as more supplies are discovered.

Speaking in an interview with German magazine Der Spiegel, he said there was unlikely to be any dip in prices in the short term, but reckoned prices will probably settle at an average of about $40 a barrel in the medium term, before falling lower.

Oil prices have surged this year amid fears about supply and global instability, pushed a barrel's price to more than $75 in April, amplifying concerns that increased raw material costs would seriously impede global growth.

A barrel of New York light crude was trading at $71.63 on Friday, while London benchmark Brent crude was at $70.48.

"We cannot really count on oil prices easing very much in the near future," Browne told Der Spiegel in an interview due to be published today. "But is very likely that oil prices will range in the medium term around an average of $40, and in the long run it could even be $25 to $30."

Browne said that companies were finding large oil deposits in the Caspian Sea, while there was good production potential in countries such as Russia and regions including western Africa. He also said that improved efficiency would help boost crude extraction and added that, in the future, consumers would have a large role to play in deciding the success of new technologies.

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