To some, BP‘s (LSE:BP) share price drop since the weekend might come as a shock. US military action in Venezuela — a key oil producing nation — should have powered the FTSE 100 oil stock higher, right?
The Brent crude benchmark is up 2.2% since markets opened Monday on fears of oil supply disruptions. Major US oil producers like Chevron, ConocoPhillips, and ExxonMobil have printed even greater gains.
In contrast, BP shares have fallen 1.3% so far this trading week.
So what on earth’s going on with BP’s share price? And can investors expect it to break out of its current lull and soar in 2026?
Industry recovery?
US action to remove Venezuelan President Nicolas Maduro will have enormous economic and geopolitical consequences. One gigantic change is likely to be a complete overhaul of the South American country’s long-underperforming oil industry.
At the moment, though, the potential impact this will have on crude prices is hard to predict.
Matthew Ryan, head of market strategy at Ebury, notes that “the country’s primary growth engine, its dominant oil industry, looks set to be overhauled under US oversight, and that should boost production in the coming years“.
He does add, though, that “a ‘quick restart’ in the oil sector is not on the cards… and any impact on global oil prices would likely be slow to be realised“.
So over the long term, it might become more difficult for companies like BP to generate healthy profits as supply levels rise.
Why are US stocks rising?
Why, then, have US oil stocks risen sharply while BP’s share price hasn’t? The UK company also has operations in Venezuela, after all.
It all comes down to President Donald Trump’s plans to make Stateside operators the heart of any Venezuelan oil industry recovery.
On Sunday he said that “we’re going to have our very large United States oil companies… go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country“.
Given Venezuela has the largest oil reserves anywhere in the world, the profits could be incredible even if global supply increases.
Are there other threats?
As I say, the outlook for BP is less encouraging if production from one of the world’s sleeping oil giants ramps up.
But it’s only one threat facing the FTSE 100 company, either now or over the long term. Its decision last year to refocus on fossil fuels could be more profitable today. And it’s certainly making good progress here — in December its seventh major new project for 2025 came online and ahead of schedule, too.
However, this strategic pivot also creates danger as the world transitions from oil and gas to nuclear power and renewables. Other dangers lurk for investors, too, from the company’s enormous debt levels, to the possibility of further boardroom volatility under new CEO Meg O’Neill.
Bottom line
In my view, the risks of investing in BP are too great, and I think its share price underperformance could continue. But it is cheap, trading on a forward price-to-earnings (P/E) ratio of 9.5 times. So it might be worth consideration from more confident investors.
