The BP (LSE: BP) share price has taken an actual beating. In a turbulent time for world markets, the oil large has been hit tougher than most.

BP shares have tumbled 15% in only a week and are down a full 35% over the previous 12 months. That’s a bruising run for the FTSE 100 heavyweight. The share price spike throughout the Putin-fuelled vitality shock of 2022 is now a fading reminiscence.

So what’s gone improper? Loads, truly. Clearly, there’s Donald Trump. His tariff discuss has despatched oil costs sliding with Brent crude now hovering nearer to $60 a barrel. 

Can this FTSE 100 massive beast roar once more?

That’s dangerous information for vitality giants like BP. Whereas it may well break even at round $40 a barrel, falling costs inevitably hit earnings and earnings. If commerce tensions sink the worldwide economic system then vitality demand will observe, together with BP shares.

BP has issues of its personal. It’s spent the previous few years tying itself in knots over its technique. It swung arduous towards inexperienced vitality, solely to backtrack in current months after coming below heavy stress from activist investor Elliott, which took a 5% stake and is pushing for a reset.

BP’s chairman Helge Lund – a key backer of the web zero transition – is stepping down. New CEO Murray Auchincloss is scaling again renewables funding and ramping oil and gasoline spending again up. 

That has left the corporate below fireplace from indignant local weather critics and equally pissed off shareholders alike.

BP’s earnings nosedived even earlier than the newest bout of market chaos, with 2024’s earnings per share down a staggering 97%. Consequently, the corporate’s price-to-earnings ratio has shot up to 186. A couple of months in the past, the P/E was round 5 or 6 occasions and seemed a cut price. As we speak, I’m not so certain.

The current buying and selling replace, revealed on 11 April, didn’t assist. BP mentioned gasoline and low-carbon vitality manufacturing is down, with solely a slight rise in oil. Gasoline buying and selling was “weak” whereas internet debt jumped by $4bn within the quarter. Whereas BP expects that to reverse attributable to seasonal elements, it added to the gloom.

I simply hope the dividend holds

Its stellar share buybacks have been trimmed. BP was spending up to $1.75bn 1 / 4 shopping for again its personal shares. Now that’s been in the reduction of to between $750m and $1bn. Rightly so, given falling earnings, however nonetheless a blow.

Following the share price stoop, BP’s forecast to yield 7.4% in 2025 and seven.72% in 2026. Let’s hope the dividend proves sustainable. A lower can’t be dominated out.

If central banks begin slashing rates of interest to offset a slowdown, its $23bn debt will get cheaper to service and vitality demand might choose up. Which may throw BP a lifeline.

I purchased BP shares a few months in the past, making the most of the low P/E and improved yield. Clearly, it hasn’t gone effectively thus far. I’m holding, however it is a extremely dangerous inventory at this time. The truth is, it has been ever for the reason that Deepwater Horizon blow-out in 2010, some 15 years in the past now.

Cut price hunters contemplating the inventory ought to strategy with excessive warning. There’s an terrible lot happening right here, and we don’t know the way it will pan out. Or even when it’s a cut price!