BP (LSE: BP.) share price moves are back in the spotlight as oil pushes above $100 following the Iran crisis. But is this really just another geopolitical spike? Beneath the headlines, a deeper shift is taking shape: commodities, inflation pressures, and tightening energy supply suggest a broader structural story that many investors may be overlooking.

Oil price surge

Today, markets are focused on the trigger for the latest oil price spike. Dire warnings suggest crude could hit $150 a barrel if tankers remain unable to pass through the Strait of Hormuz.

However, investors may be better served looking beyond the trigger and towards the underlying foundations — namely that energy could be becoming structurally scarcer.

What we may be witnessing is the broadening of a commodities cycle into one of the few major assets that had yet to move: oil.

Gold and silver prices have already surged in recent years. Yet many investors have not connected that move to the possibility of a more persistent inflationary environment.

In such regimes, holding large amounts of cash can become increasingly unattractive. Capital often rotates towards real assets — raising the question of whether energy could be next.

Supply matters

Persistently low oil prices over the past few years have slowed production growth across the industry. In the US, rig counts in the Permian Basin have fallen as producers responded to prolonged weakness.

Now, with prices surging, BP looks well positioned to benefit. Last year, production rose by 150,000 barrels per day, alongside a major new discovery at Bumerangue in Brazil.

Its capital framework was overhauled last year, with around $10bn earmarked for oil and gas, 70% focused on oil.

That strategy reset is already proving prescient. The oil major assumed oil would average $74 to 2027, a scenario expected to drive free cash flow higher at a compound annual growth rate of 20% – roughly doubling cash every four years.

The plan also targeted a return on average capital employed (ROACE) of 16%, showing how efficiently the oil major could turn capital into profit. With oil now surging and the broader energy backdrop supportive, those assumptions look conservative. I would not be surprised to see them revised higher.

Risks

Elevated oil prices don’t change the fact that BP has a structurally higher cost base than many peers, and a weaker balance sheet has forced buyback suspensions. As the upstream pipeline grows, operational risks — including project delays, cost overruns, or regulatory changes — could affect cash flow.

Ironically, today’s high prices might accelerate the move away from hydrocarbons, just as past lows caused underinvestment. Investors should watch both near-term volatility and the longer-term structural transition.

What’s the verdict?

In a world of persistently high inflation and record government deficits, tangible assets like oil remain a vital portfolio hedge.

BP’s pivot back to hydrocarbons, with growing upstream production, looks set to generate strong free cash flow in this supportive macro environment.

While short-term volatility remains, its ability to produce real cash and grow dividends is a key strength. That’s why I recently bought more of its shares for my Stocks and Shares ISA.