When the oil price rises, the BP (LSE: BP) share price tends to rise with it. Not today. What’s going on?

Last Thursday (28 April) was particularly volatile for oil, with Brent crude rocketing to $124 a barrel. It’s since retreated to $112 but Macquarie Group warns it could hit $200 if the Iran war drags into June. Despite the threat, BP shares are down 5% in the last month. That’s very odd. Here’s what I think is happening.

Why is this stock slipping?

First, the FTSE 100 oil giant has had a jolly good run. Its shares are up an eye-popping 61% in the last year. Investors may be reluctant to bid the stock even higher. Also, people will have noted that whenever Donald Trump declares good news in the Gulf, the oil price quickly dips, and so do BP shares. We’d all love to see the conflict speedily resolved so the bombing can stop and the oil price retreat, but the impact on BP shares would be brutal.

This is therefore a risky stock to buy with a short-term view. It could slump if the conflict is resolved, even though it’ll take months to restore oil supply

Iran could hit the long-term case

There are long-term threats too. The Iran crisis has reminded us that the world still runs on oil. But it’s also shown consuming nations just how vulnerable they are to bottlenecks in the most geopolitically sensitive shipping passage in the world. This could accelerate the shift away from fossil fuels and towards home-grown renewables.

Also, the war is hitting infrastructure, and BP faces both longer shipping routes and higher operating costs. Its net debt was already a hefty $25.3bn in Q1. There are other concerns: as UK consumers struggle, oil giant profits could make a tempting target for politicians, and BP could face even tougher windfall taxes.

So is it too risky to buy at today’s price of 575p? It does have a modest forward price-to-earnings ratio of just 8.5. But 2026 earnings could prove highly volatile, so we shouldn’t rely too much on that. So here’s the case, as I see it.

What should investors do?

Investors are wary of buying BP after such a strong run and fear making a quickfire loss due to an event they simply cannot predict: the outcome of this war. Many suspect the big gains have already been made, and today’s buyers risk making outsized losses. Even a 4.3% trailing dividend yield doesn’t compensate for that.

I’m delighted to hold the shares myself, but reluctant to buy more given today’s uncertainy. This volatile stock market has thrown up plenty of buying opportunities, and most are a lot less binary than this one. I’ve just bought two FTSE 100 stocks in an entirely different sector. But I’ll be keeping a close eye on the BP share price, as we may be handed a tempting entry point in the weeks ahead.