BP is asking a court that will assess penalties for the Deepwater Horizon disaster to weigh the effects of the volatile oil market, saying high fines and low-priced crude could keep its Houston-based U.S. unitin the red five years after the catastrophic Gulf of Mexico oil spill.

The British oil company argued in court papers this week that the penalties federal prosecutors are seeking are too high given the financial pain they'll inflict as BP grapples with falling crude prices.

U.S. attorneys are asking a federal judge in New Orleans to levy pollution penalties of $16 billion to $18 billion, but if that happens, the BP unit tangled up in oil spill litigation could become strapped for cash - a hardship the company argues would go well beyond the law's intent of deterring misconduct. Its $42 billion in oil spill costs so far and declining oil prices have already done much of that work, BP says.

Pavel Molchanov, an analyst with Raymond James, noted that $18 billion in fines is a huge sum even for a giant oil company. In theory, the BP parent company wouldn't go broke if it had to pay that sum, but "it would be painful for anybody," Molchanov said.

But the argument that falling oil prices should prompt a judge to reduce BP's fines is unlikely to get much traction in federal court, said Blaine LeCesne, a Loyola University law professor who has followed the case.

"It's supposed to be painful," he said, and the Clean Water Act wasn't intended to consider changing conditions such as temporary downturns in the price of oil. "It doesn't make sense they should benefit from a lower fine at a particular point in time."

BP, which employs 10,000 in Houston, isn't expected to start paying oil spill fines in earnest for a couple of years, as its appeals make their way through U.S. courts.

The U.S. benchmark crude price rose $1.86 on Tuesday to $57.12. Its high for the year was $107.26 on June 20.

U.S. oil producers have started to plan for slimmer budgets next year. Any extra burdens, such as BP's fines, could trickle down into the area's economy, which may see oil producers cut spending by 20 percent in 2015, said Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston.

"These big producers are huge outsourcers," Gilmer said. "The multipliers are always big in the energy industry for related layoffs. It cascades pretty quickly."

BP is already planning layoffs in conjunction with $1 billion in restructuring costs next year.

Its new arguments came the same day credit agency Standard & Poor's Rating Service revised its debt-grade outlook for BP, Royal Dutch Shell, Total and other European oil companies to negative, slicing its international oil price assumptions for the next two years to $70 to $75 a barrel.

BP shares have fallen by more than 25 percent since June as investors fret over the company's investment in state-owned oil giant Rosneft in Russia, which could face an oil-driven recession next year, as well as BP's remaining oil spill liabilities and the impact of falling oil prices.

BP is fighting on two fronts in the civil court battle over how much it owes for the 2010 oil spill. Plaintiff attorneys are planning to ask an appeals court to stack punitive damages on top of other claims BP is paying to Gulf Coast businesses and residents.

And federal prosecutors are gearing up for weeks of testimony starting in January before a New Orleans federal judge, during which they will present their case for $16 billion to $18 billion in pollution fines.

In September, U.S. District Judge Carl Barbier found BP was grossly negligent in the lead-up to the oil spill. The ruling means BP could face the maximum $4,300-per-barrel fine for the spill. He has yet to rule in a dispute between BP and the government over how much oil spilled.

"Given the enormity of this spill and its toll on individuals, society, and the environment, and given BP's egregious behavior, the court should only reduce the penalty if BP presents valid reasons to do so," the prosecutors said.

Plaintiff attorneys will appeal one section of Barbier's 153-page ruling that barred punitive damages against BP because of a legal precedent set by the 5th U.S. Circuit Court of Appeals, Steve Herman, co-lead counsel for a committee of lawyers representing oil spill claimants, said in an emailed statement.

BP's U.S. unit said the high fines would "result in a funding shortfall" as it would likely bear the brunt of the penalties for the worst U.S. offshore disaster.

It cited government and academic data suggesting the spill had no long-term effects to fish and shellfish populations and said seafood safety testing has shown limited exposure. BP said three quarters of the Gulf shoreline was untouched by the oil and that 99 percent of birds observed during the spill had no visible signs of exposure to the crude.

In a brief last week, prosecutors said they will present evidence that the spill caused significant environmental damage.

They said BP has a history of major environmental violations, including those at Endicott Island in Alaska, where BP was fined in the late 1990s for illegally dumping hazardous waste; at its Grangemouth oil refinery in Scotland, where BP was fined for safety law violations; and in Texas City, where a 2005 explosion and fire at its oil refinery killed 15 workers and injured hundreds.