(by Ameli Berksman)

BP, the world’s second-largest oil group, said it can be forced to lift capital spending due to higher competition for drilling rig services.

The company’s chief executive Lord Browne said sudden inflation in capital goods costs will probably affect the oil industry and BP may be one more casual.

BP’s profits for the third quarter accounted for $3.94 billion, 43% higher than in the prior year.

“Steel prices are up more than 50%,” Lord Browne said. “While industry capital expenditure is rising 15% each year. Any spare capacity is being absorbed. It wasn’t evident until the first quarter that market prices for our capital goods were increasing quite strongly.”