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The BP (LSE: BP.) share price has fallen back since its highs of 2023, though it’s still up 62% in the past five years. The stock has faced mixed fortunes, with the latest drag, falling oil prices — Brent Crude fetches not much more than $60 per barrel as we reach the end of 2025.
The whole oil and gas business has been rehabilitated since the world — mainly at the behest of Donald Trump — turned from the alternative energy drive and back towards hydrocarbons. But was that just a temporary reprieve, or can BP keep pumping oil, and cash, for many years?
My first thought is that climate change isn’t fake news and hasn’t gone away, not matter what some politicians want us to believe. And it must surely come back to bite us, sooner or later.
Mixed outlooks
Brokers are bullish, but not as strongly as they have been in the past. A slew of updates in December puts the average BP share price target at around 490p. It suggests a rise of 15% from the price, at the time of writing. And while that’s nice, it doesn’t exactly grab my attention. And the recommendation front is uncertain too, with 11 of 19 analysts sitting on BP shares as a Hold.
Looking a bit further forward, the outlook for oil isn’t exactly rosy. There are increasing signs of a global oversupply, which could push prices even further lower. An end to the war in Ukraine would be very welcome, but it could release Russian oil supplies back onto the global market.
The latest forecast from the US Energy Information Administration suggests Brent Crude could fall to $55. And it could stay there through at least the first quarter of 2026. That would dent BP’s profit margins.
Cash cow?
BP still offers an attractive forecast 5.8% dividend yield. That’s by no means guaranteed. But share buybacks lend some confidence to it, with another $750m planned for the final quarter of the year. And with BP’s dividend track record, the share valuation still looks reasonable to me — at least in the short term.
We’re looking at a forward price-to-earnings (P/E) ratio for 2025 of a bit over 14, dropping under 10 by 2027 forecasts. That seems fine, but I see one main uncertainty. How much confidence can we put in earnings forecasts for a company whose products are at the mercy of ever-changing global pricing?
I expect BP will do its best to keep its long-standing dividend tradition going. And I could see the solid payouts continuing for quite a few years yet.
Turning bear?
On that basis, I’ve long been optimistic on the stock — though never enough to actually buy any. And I do think BP could still be a solid candidate for income investors to consider.
I’m just less convinced by today’s share price targets. The whole fossil fuel thing worries me for the long term too, pushing BP down my own candidates list. My one-word outlook for 2026? Volatile.
