The BP (LSE: BP) share price has had a rough time lately. In fact, it’s been struggling ever since the turn of the millennium. Once seen as a go-to blue-chip FTSE 100 stock, today it comes with an awful lot of baggage.
It took years for the oil giant to recover from the Deepwater Horizon disaster in 2010. When the 2022 oil shock sent the shares surging, there was a brief sense that the worst might be behind it. That rally has long since faded. With oil now hovering around $65 a barrel, BP is still turning a profit, but signs of strain are clear.
If President Trump’s renewed trade tariff threats drag the global economy into recession, oil prices could slide even further. Any progress on a nuclear deal with Iran could have the same effect, as sanctions lift and more oil hits the market.
Can it fight back?
At the same time, BP is battling uncertainty over strategy. Newish CEO Murray Auchincloss has reaffirmed a shift back towards fossil fuels, in a hard reverse from its renewables drive. It’s a bold call, but leaves BP exposed if global energy policies continue to move towards greener alternatives.
The numbers tell the story. The BP share price has fallen 17% over the past month alone, and it’s down almost 30% in a year.
That may tempt some contrarian investors who believe the sell-off has gone too far. BP also has hedge fund Elliott Management on its case, pushing for changes to boost value. A shake-up could be coming, although whether it would work is anyone’s guess.
Buying at a time like this carries real risk, but it’s often darkest before the dawn. BP’s trailing yield of 6.55% offers some comfort while waiting to see if a recovery takes shape.
The high dividend yield is tempting
City brokers still seem hopeful. The 13 analysts offering one-year share price targets have produced a median forecast just under 455p. That would mark a gain of almost 25% from today’s 365p. Which is a pretty hot forecast. Add in the dividend yield, and the potential total return climbs above 30%.
Forecasts are never gospel, especially in today’s fast-changing markets. It’s also worth noting that many analyst predictions were made before BP’s recent sharp decline, so views may well have shifted.
Among the 29 analysts who’ve issued a rating in the past three months, 18 have sat firmly on the fence with a Hold. However, 10 say Buy, and of those, seven rate BP a Strong Buy. Only one recommends selling. Overall, it’s a cautiously positive outlook, but nobody is pretending the road ahead will be smooth.
I hold BP shares myself, having bought in a few months ago. It’s not a holding I feel particularly confident about, but it was too tempting to pass up at the time.
I’ll be happy if the dividend keeps flowing and the shares stabilise. As for a 25% rise over the next year, that would be a pleasant surprise, but I’m not counting on it. I certainly won’t be adding to my stake today.
