BP Stock Is Jumping as Oil Prices Spike. The Question Is Whether It’s Actually Worth Buying Now

When an oil stock is doing well, a certain type of nervous energy follows. The quiet confidence of investors watching numbers rise is almost palpable on the trading floors, but there’s also a nagging suspicion that it won’t last. That’s essentially where BP is at the moment, in the spring of 2026, riding one of the most dramatic commodity surges in recent memory, leaving many people unsure of whether to jump on board or keep a safe distance.

The stock of BP has increased by almost 39% so far this year, setting it up for its best annual performance since 2022. Energy markets were in disarray that year due to Russia’s invasion of Ukraine, and BP reported record profits while the rest of the world scrambled. Ignoring the similarities to today is uncomfortable.

This time, the Middle East—more especially, the closure of the Strait of Hormuz during the conflict between the United States, Israel, and Iran—is driving up the price of Brent Crude well above $80 per barrel, with prices momentarily hovering around $110 at their highest point.

In its Q1 2026 trading update, the company referred to oil trading as “exceptional,” a term that usually draws criticism from the press department of an oil major. In the first quarter of 2025, Brent averaged $81.13 per barrel, while in the fourth quarter, it was $63.73. This discrepancy is significant because it directly affects earnings, and BP appeared keen to inform the market. This optimism might be justified. It’s also possible that a management team is in charge because they anticipate more difficult questions.

The strategy change occurring beneath the stock rally is what makes BP’s situation genuinely intriguing and complex. In what appeared to be a reluctant admission that the green transition wasn’t proceeding as quickly as boardrooms had once hoped, BP quietly gave up on most of its renewable energy goals a year ago and turned back toward fossil fuels.

Investor sentiment regarding this change is generally positive, according to Morningstar’s Allen Good, who closely covers the company. However, he added a crucial disclaimer: BP made this decision years after Shell had, and Shell’s advantage is evident in the numbers.

BP seems to be playing catch-up, which is uncomfortable for a business of its size. If one were to stand outside BP’s London headquarters in St. James’s Square, it would be simple to assume that the company was under firm control. On paper, that impression is supported by the rally.

However, a closer look reveals a company with net debt that is predicted to increase to between $25 and $27 billion, in part due to a working capital build of up to $7 billion linked to the extremely high oil prices, which are purportedly its main advantage. Susannah Streeter of Wealth Club noted that higher prices necessitate more capital to hold the same barrels. The burden and the windfall come at the same time.

AJ Bell’s Head of Markets, Dan Coatsworth, pointed out something that doesn’t always make headlines: BP doesn’t immediately benefit from higher oil prices. Any significant increase from the spike won’t fully register until Q2 because output is priced on a one- and two-month lag. For anyone hoping that this quarter’s earnings will fully capture the drama of a Middle East conflict upsetting global supply chains, that small delay is crucial. Production-related gains are still catching up, but the trading division did benefit immediately, as is confirmed.

The dividend question comes next. In order to strengthen the balance sheet, BP halted its share buyback program in February, but it continued to pay dividends. That dividend is still among the top ten largest shareholder distributions in the UK this year, with an estimated value of GBP 3.9 billion.

It has significance. However, any investor hoping to receive a windfall in oil prices directly through buybacks will probably be let down, at least for the time being, as buybacks are on hold and debt is increasing. According to Coatsworth, the additional revenue is more likely to be used to lower borrowing than to compensate shareholders.

Morningstar’s analysis highlights the harsher reality that lies beneath all of this. BP is trading much higher than Morningstar’s fair value estimate of GBP 4.70 per share, at about GBP 6. The gap is so large that some analysts think a takeover premium may already be priced in.

For years, BP has been the subject of speculation about significant acquisitions, and a stock that is experiencing intense geopolitical tension is the perfect setting for such speculation. However, when the geopolitical temperature drops, speculation incorporated into a valuation is also the first to vanish.

Even a brief two-week ceasefire between the United States and Iran caused Brent crude to quickly drop from near $110 back toward $91. Shares of BP followed. This level of sensitivity serves as a reminder that the company’s transformational changes are not the driving force behind this rally. It is being fueled by a worldwide crisis, which is by definition transient.

With a two-star Morningstar score and a “High” uncertainty rating, BP stock does not represent a company that is providing clear value at current prices. It depicts a business that could succeed or fail based on uncontrollable circumstances and an unpredictable world.

It’s difficult not to feel a little sorry for the average investor who is attempting to make sense of all of this. The stock has increased. The narrative is captivating. The news cycle is intense and the price of oil is high. However, the figures indicate that the price already reflects a large portion of the positive news.