Investors are piling back into BP (LSE:BP.) shares today. As I type, they’re up 3% in midweek trading. It’s hardly a shock given the close relationship between company’s profits and the oil price, which is soaring again as the fragile Middle East ceasefire crumbles.
The question is, where will BP’s share price head over the longer term? Given the fluid state of US-Iran relations, it’s fair to expect further volatility. Yet as an investor rather than a short-term trader, I’m looking for clues as to where the FTSE 100 share could be headed further out, say a year from now.
So I’m checking the views of analysts as a first port of call. Their consensus view is BP shares will rise 27% in value over the next 12 months, to 622.3p. That’s based on the average price target of 19 City brokers.
If that’s accurate, a £9,999 investment here today will be worth £12,699 by next July. With dividends included, that would become £13,397, representing a terrific 34% total return.
But what could push BP’s share price to those lofty levels?
Oil’s bubbling again
The most obvious answer is a prolonged conflict in the Middle East. Oil stocks have surged today after the US and Iran traded fresh missile attacks, driving crude values higher. Failure to secure a long-term ceasefire could create prolonged supply issues — roughly 25% of the world’s oil travels through the Strait of Hormuz.
The smart money appears to be on an intermittent conflict with recurring flare-ups lasting months. In other words, more of the same. But how long this lasts, and the impact it has on oil supplies is tough to predict.
It’s why oil price forecasts are unusually wide at the moment. Goldman Sachs thinks Brent crude will be at $80 a barrel by the end of 2026. Citi analysts are forecasting 60 bucks a barrel. And there are plenty of others in between.
What else could move BP shares?
Though clearly important, the US-Iran war isn’t the only thing that could cause BP’s share price to rise and fall. As investors, we need to look at the whole picture when deciding which stocks to buy.
So what else could influence the oil giant’s share price? These include:
| Bull case | Bear case |
|---|---|
| The Ukraine-Russia conflict continuing, worsening the supply crunch. | Falling oil demand due to higher inflation and weaker economic growth. |
| Fresh asset sales that prompt more share buybacks. | Surging energy output and investment from OPEC+ and/or non-OPEC+ countries. |
| Accelerating cost reductions as management simplifies the business. | Growth in the company’s $25.3bn net debt pile. |
| Fresh expansion in the lucrative LNG market. | Potential windfall taxes on UK oil companies under a new prime minister. |
| Booming AI data centre construction that boosts energy demand. | Energy efficiency and renewable energy trends that reduce oil usage. |
Is BP a buy?
So based on this information, should investors consider buying BP shares today?
Let me tell you where I stand. For me, there is far more uncertainty facing the business in the short-to-medium term than I’m comfortable with. And looking longer term, I’m concerned about how badly the global transition to clean energy will hit profits. Especially given BP’s decision to scale back its own renewable energy operations over the last year.
On the other hand, BP shares are cheap on paper. At 490p, they command a price-to-earnings (P/E) ratio of 7.3 times. Yet I’m unmoved, as — in my opinion — this low valuation reflects the huge risks it faces in 2026 and beyond. Given the choice, I’d rather invest a £9,999 lump sum in other low-cost stocks today.
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Royston Wild does not hold any positions in the companies mentioned.
