Feb 2, 10:17 AM EST

BP's fourth-quarter earnings plunged 91 percent amid sharp declines in oil prices as the British oil company continued to make provision for the Deepwater Horizon disaster in the Gulf of Mexico and streamline operations

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LONDON (AP) -- BP's fourth-quarter earnings plunged 91 percent amid sharp declines in oil prices as the British energy company continued to make provision for the Deepwater Horizon disaster in the Gulf of Mexico and streamline operations.

The company reported Tuesday that underlying replacement cost profit fell to $196 million from $2.2 billion in the same quarter a year earlier. The figure is an oil industry accounting standard that includes fluctuations in the price of oil and excludes one-time items.

"It's going to be a very turbulent year for our industry," CEO Bob Dudley said as he opened a new conference in London.

Oil companies are slashing jobs and delaying investments as crude prices plummet. Brent crude, the benchmark for international oil, fell 34 percent last year and hit a 12-year low of $27.10 a barrel in January. It traded at $34.13 on Monday, having been above $100 a barrel as recently as September 2014.

The company also set aside an additional $443 million in the quarter to cover costs related to the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. Charges for the spill now total $55.5 billion.

BP stock fell sharply on the news by early afternoon, dropping nearly 9 percent to 335.10.

Yet Dudley took the numbers in stride, arguing that the markets had failed to take into account a robust $5.8 billion operating cash flow for the quarter. The overall net loss narrowed to $3.3 billion from $4.4 billion a year earlier.

The company also said it was taking steps to streamline redundant systems put in place for legal reasons after the spill.

"We have our confidence back now," he said.

The company said it reduced controllable cash costs by $3.4 billion last year, and estimated future cuts at almost $3.6 billion. It forecast asset sales of as much as $5 billion this year.

BP also announced 3,000 job cuts globally by the end of 2017. That is in addition to 4,000 cuts planned in exploration and production - including some 600 in North Sea operations. European rival Royal Dutch Shell, which reports earnings later this week, said in January that its planned merger with British gas producer BG Group would result in some 10,000 staff and contractor job losses across both companies.

Oil prices have plunged because global supply is high at a time when consumption is growing more slowly than expected, particularly in China.

OPEC members, meanwhile, are refusing to cut production for fear of losing market share to non-members like the U.S. and Russia. And Iran is looking to start pumping more after decades of sanctions.

BP is supported somewhat during the current price slump by higher margins at its downstream business, which includes refining and selling fuels. But that's not enough to offset the broader impact of the market drop, said Spencer Welch, an oil expert at IHS.

"Without the ongoing costs of Macondo/Gulf of Mexico, then BP would still have made a reasonable profit in 2015, mostly from the Downstream business," Welch said in an email.

Dudley said he expected a tough 2016, particularly in the first half. There are few predictions that oil prices will bounce back quickly, with some analysts forecasting they will drop to near $10 a barrel.

And that means lots of uncertainty.

"I expect continued layoffs, restructurings, and consolidated among oil and gas companies," said Gianna Bern, associate teaching professor of finance at the University of Notre Dame. "We are witnessing the perfect storm in this industry."

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