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Former BP boss warns oil prices will stay 'volatile' amid escalating Middle East tensions
19 June 2025, 11:29
A former BP boss has warned oil prices will be "volatile" for the foreseeable future as tensions in the Middle East continue to escalate.
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Lord John Browne, chief executive of the oil and gas giant for over a decade, told LBC "fear" will dictate global prices in the short term after Israel launched its initial assault on Iran last Friday.
The start of the conflict caused the price of the benchmark Brent crude to rise more than 10 per cent last week, reaching its highest level since January.
Ex-energy chief Lord Browne explained global concerns centre around the Strait of Hormuz, a key shipping route situated on the north coast of Iran, through which about a fifth of the world's oil passes through.
"Short term, a lot of the prices are controlled by fear. Fear that Iran will do something different and affect transportation out of the Strait of Hormuz," Lord Browne said.
Major oil and gas producers in the Middle East transport energy from the region through the Strait of Hormuz, with several dozen tankers passing through at any one time.
This means Iran has the potential to disrupt supplies of millions of barrels of oil a day if it targets infrastructure or shipping in the vital transport route, which provides the only sea passage from the energy-rich Persian Gulf to the open ocean.
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However, Lord Browne believes a volatile response from Tehran is "unlikely" and predicts prices will settle down in the long term, having already begun to ease this week.
"We have seen over the last few days Iran has stopped its export production. It's down from 1.7million barrels a day to less than about 100,000.
"That can be made up so long as the straights are working. I think there will be a lot of volatility short turn. But longer term, when we settle down here, the price will be quite soft."
The cost of crude oil affects everything in Britain, from the expense of filling up a car to supermarket food prices.
Oil prices are still well below the peaks seen in 2022 following Russia's invasion of Ukraine, where the price of crude soared well above $100 a barrel.
Asked whether we could see a return to those levels, Lord Browne claimed it depended on what action Donald Trump takes in the Middle East.
The leader of the world's most powerful military has remained cryptic about his next move, saying he likes 'to make decisions at the last second'.
"It depends what happens on the Strait of Hormuz, but if we really do shut down global supplies the price will go up a lot," Lord Browne said.
"I'll be looking for what America is going to do and what the President is going to do towards Israel.
"I would always want to de-escalate this so a negotiation settlement can take place. A negotiation that would have to involve Russia, India and China.
"China is the biggest taker of Oil from Iran. Let's see what would happen now and watch very carefully what military action takes place, whether it is going to be very strong or mild."
On Thursday morning, Soroka Hospital in southern Israel was directly hit by an Iranian missile, injuring 30 people, the IDF said.
The hospital was one of several areas struck by Iranian missiles on Thursday, which has resulted in more than 100 injuries across multiple Israeli cities.
