Shares in oil giant BP (BP) slipped today as questions were raised over whether its pivot back to oil was the right decision in the face of volatile prices.
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Brent crude futures were down 16 cents, or 0.26%, at $60.90 a barrel in early trading, while U.S. West Texas Intermediate futures were 15 cents lower, also down 0.26%, at $57.31.
Brent crude is down nearly 8% in the last month – see below:
The reason for the leak today was renewed hope, following President Trump’s phone call with Russian leader Vladimir Putin, that an end to the war in Ukraine could finally be in sight.
Supply Fears
What is good for the people of Ukraine may not be good for oil stocks as an end to fighting could mean a lift to sanctions on Russian oil and more supply.
That meeting continued weak demand as the global economy stutters would likely mean lower oil prices going forward.
Fears of too much supply in the system were also stoked this week by the International Energy Agency’s outlook for a glowing glut of oil in 2026.
Also weighing on prices, the Energy Information Administration said on Thursday that U.S. crude inventories increased by 3.5 million barrels to 423.8 million barrels last week, compared with analysts’ expectations in a Reuters poll for a 288,000-barrel rise.
The data also showed a rise in U.S. production to 13.636 million barrels per day, the highest on record.
Strategic Risk
BP’s stock was down 0.4% in pre-market trading as a result. It is perhaps more sensitive to the price level this year given its highly publicized refocusing of its business away from the green energy transition back to fossil fuels.
This includes recently giving a thumbs up to a $5 billion Tiber-Guadalupe project in the Gulf of America/Mexico. It is expected to begin producing 80,000 barrels of oil a day from 2030 and has an estimated 350 million barrels in recoverable resources.
However, Kathleen Brooks, research director at XTB, said given the price picture BP could be having second thoughts about its new strategy.
“BP’s pivot back to oil and gas is at risk from the Russian and Ukraine developments,” she said. “Once lauded by shareholders, the pivot leaves the company exposed to a weaker oil price if a peace deal is reached.”
Is BP a Good Stock to Buy Now?
On TipRanks, BP has a Moderate Buy consensus based on 6 Buy and 3 Hold ratings. Its highest price target is $66. BP stock’s consensus price target is $41.36, implying a 26.17% upside.
