Rising nearly 50% since April 2025, shares in BP (LSE:BP.) have recovered strongly since President Trump rocked global markets on his so-called Liberation day with his unique approach to tariffs. But the energy giant’s share price is currently (9 March) well below its five-year high of £5.60, achieved in February 2023.
However, with oil and gas prices spiking, could the group’s stock price return to that level soon? Let’s crunch some numbers.
Some maths
With most of the group’s revenue earned from oil-based products, BP’s financial performance is likely to be heavily influenced by the price of a barrel of oil. But rather than rely on anecdotal evidence, let’s try and prove this.
The table below shows the group’s 2018–2025 operating cash flow alongside the average price of Brent crude. With a 96% correlation, there’s clearly a strong relationship between the two.
| Year | Brent crude ($ per barrel) | Net cash from operating activities ($bn) |
|---|---|---|
| 2018 | 71.34 | 22.9 |
| 2019 | 64.30 | 25.8 |
| 2020 | 41.96 | 12.2 |
| 2021 | 70.86 | 23.6 |
| 2022 | 100.3 | 40.9 |
| 2023 | 82.49 | 32.0 |
| 2024 | 80.52 | 27.3 |
| 2025 | 69.14 | 24.5 |
But what does this mean for BP’s share price?
Our second table summarises the oil price and the group’s year-end share price over the same period. Although there appears to be a bit of a blip in 2025, once again, there’s a clear pattern. The 69% relationship between the two variables is a strong one but, not surprisingly, it suggests other factors are having an influence.
| Year | Brent crude ($ per barrel) | Year-end share price (pence) |
|---|---|---|
| 2018 | 71.34 | 496 |
| 2019 | 64.30 | 472 |
| 2020 | 41.96 | 255 |
| 2021 | 70.86 | 331 |
| 2022 | 100.3 | 475 |
| 2023 | 82.49 | 466 |
| 2024 | 80.52 | 393 |
| 2025 | 69.14 | 432 |
By plugging these numbers into a spreadsheet it’s possible to come up with an equation that predicts the group’s share price.
Share Price [pence] = 175 + (3.3 x Oil Price [$])
This tells us that Brent crude may need to average nearly $117 a barrel — over a sustained period — for BP’s share price to return to £5.60.
Okay, this is a bit simplistic. After all, in February 2023, Brent crude was selling for approximately $83. And it implies that if oil was being given away, the group’s share price would still be 175p. But even if it can’t account for all of it, this analysis shows that the oil price plays a big part in determining the group’s stock market valuation.
Final thoughts
What does this tell us?
Well, unless the current Middle East conflict continues for a long time, the oil price is unlikely to rise sufficiently to get BP’s shares back to £5.60. If they’re to reach this level again, it’s probably going to have to make some other changes.
And that’s what’s happening. BP’s offloading some of its non-core assets to help reduce its debt burden. It’s also trying to cut costs. In addition — to the understandable horror of environmentalists — it wants to raise production levels.
These actions should go some way to offsetting the impact of volatile energy prices. And while waiting for these initiatives to feed through to the group’s bottom line, shareholders can enjoy a dividend yield of 4.9%. No guarantees, of course.
Investing in BP isn’t going to appeal to everyone. Some will object on ethical grounds and others will be wary of the operational challenges that the industry faces. Cautious investors could also be put off by the unpredictable nature of the group’s earnings. This uncertainty makes it impossible to know when (or if) the group’s share price will reach £5.60 again.
Despite this, most economists agree that we have yet to reach ‘peak oil’ and, despite the obvious risks surrounding energy prices, the group’s plans to improve its efficiency and reduce its indebtedness make me think BP’s a stock to consider.
