Falling oil prices haven’t stopped BP‘s (LSE:BP.) share price igniting in 2025. The FTSE 100 company’s retreat from renewables and push for more oil has clearly caught the market’s imagination.
Up 10% since 1 January, investors are hopeful the oil giant’s turned the corner after years of strategic confusion. But can BP shares really continue to climb given lasting pressure on oil prices?
One especially bullish analyst does, believing the company will surge 88% in value between now and next December, to 838p per share.
Is this pure fantasy? Or could the company turn this year’s gains into a full-blown surge?
Full steam ahead
BP’s taking no prisoners with its new growth strategy, much to the market’s delight. If it continues its no-nonsense approach, more investors could be drawn in to boost the stock further.
Just last month, BP hiked its full-year asset sales target to $4bn, up from $3bn-$4bn previously. This was well received, giving the business more money to plough into its core fossil fuel operations and tackle its high debt levels.
BP’s making great progress on the ground at the start of this new era too. Of the six major oil and gas project it’s started in 2025, four of these kicked in ahead of schedule. It’s also made 12 exciting new discoveries.
Strong operational momentum across all core divisions saw BP beat forecasts for the last quarter.
What could go wrong?
But let’s dial back the excitement for one second. Despite strong operational performances and a fresh strategic pivot, the company’s earnings are ultimately driven by oil price movements.
And market conditions are looking less than encouraging for next year.
Oversupply is a significant threat as production continues to outpace demand. With output from OPEC+ nations and those outside the bloc surging, the US Energy Information Administration (EIA) reckons Brent will average $52 a barrel in 2026.
That’s down sharply from an expected average of $69 this year. Fresh economic shocks could drive prices even lower in the New Year.
This is bad news for any oil stock. It’s especially worrying given BP’s enormous and growing debt pile (net debt increased to $26.1bn in Q3).
BP is targeting debt of $14bn-$18bn by the end of 2027. Even factoring in more potential asset sales, this may be a stretch given the oil price environment. And it could have serious consequences for BP’s dividend policy, and by extension its share price.
Is BP a Buy?
Taking all these factors into account, are BP shares a Buy right now? I’m not convinced.
With supply levels growing — and green energy demand also popping — the FTSE firm faces significant challenges now and over the long term.
So forget about that 88% price rise our bullish broker is predicting. On balance, I think BP shares are in danger of falling sharply in 2026. A 5.8% forward dividend yield might tempt dividend investors, but I’m not buying.
