Its shares tumbled over four per cent as it warned that the battle to get the disaster under control could take three months and that this figure would rise sharply as the oil slick hits land and activity to clean up the environmental disaster gathers pace.
In a statement, BP dubbed it "too early to quantify other potential costs and liabilities," but said it was taking "full responsibility" for the spill and would honour legitimate claims for damage.
However, analysts said the final bill could stand at anything between $1bn – according to Citigroup and Panmure Gordon – and $3.5bn, according to Morgan Stanley.
Peter Hitchens, analyst at Panmure Gordon, said: “BP does not insure and so will be responsible to its share of the Control of Well and Liability costs which are estimated to be running at $300m.
“This is prior to the cost of the relief which could cost a further $100m. Overall we believe that the costs associated for this could run up to approximately $1bn and there is bound to be a raft of court actions for punitive damages.
"This is going to be a very uncertain time for BP as the story enfolds. However, we believe that the $20bn decline in the market capitalisation would appear at this stage an over reaction," he added.
The international oil producer said it was continuing to ramp up its response to the oil spill, with over 2,500 personnel now involved in the response effort and clean-up on the shorelines of Louisiana, Mississippi, Alabama and Florida.
However, the group's share price has shed more than 12 per cent since the crisis first began on April 20 when Transocean-operated drilling rig Deepwater Horizon deployed to drill BP's Macondo project - caught fire and subsequently sunk, killing 11 workers.
BP began drilling activities on a relief well to intercept and isolate the oil spill on Sunday. It hopes the new well, in 5,000 feet of water, will intercept the existing well around 13,000 feet below the seabed and permanently seal it.
Chief executive Tony Hayward hailed the $100m operation as another key step in the group's battle to stem the loss of oil.
"At the same time we are continuing with our efforts to stop the leak and control the oil at the seabed, to tackle the oil offshore, and to protect the shoreline through a massive effort together with government agencies and local communities," he added.