Ollie Smith: 2026 has already put oil firmly in the headlines, with US military intervention in oil-rich Venezuela and talk of a new commodities supercycle giving crude oil prices fresh momentum. By late January, oil prices hit a four-month high as commodities markets adjusted to perceived global conflict risk and rising demand for core industrial products.
In London, both the capital’s listed oil majors, Shell SHEL and BP BP., are up since Jan. 1, but it’s BP that’s climbed nearly 6% in the year to date, positioning it for its best annual gain since 2025, when it climbed 10.13%. Its share price is now heading for the £5 mark again, a level it briefly breached in 2024. Takeover talk, which has been doing the rounds in the City for years, briefly flared up again in 2025. This follows several years of underperformance punctuated by a partial pivot into renewables. Last year, BP rolled back its renewables spending, echoing a similar move by Shell several years earlier.
Why Is BP Stock Rising in 2026?
Venezuela may have the largest oil reserves in the world, but it’s natural gas that has reportedly piqued BP’s attention. Indeed, among the first issues in incoming chief executive Meg O’Neill’s in-tray in April will be the search for natural gas licences. That will involve collaborating with partners in adjacent Caribbean Island Trinidad & Tobago. This forms part of a bigger change that has impressed a certain type of investor and outraged environmentalists: BP is spending more on fossil fuel production.
Specifically, the company now plans to increase oil and gas spending by $1.5 billion annually. That means reducing its “low-carbon transition” spending by about $5 billion to between $1.5 and $2 billion. Now, most institutional investors in BP appear content, but it’s worth mentioning that a group of activist investors, including pension funds, is already unhappy. It is now asking the company to prove how the change will benefit investors in practice. We await news of how that process will unfold.
Should I Buy BP Shares in 2026?
Does all that mean the BP’s stock price is too uncertain to be attractive? Well, Morningstar’ equity analyst Allen Good does give the company’s stock a Morningstar Uncertainty Rating of High. That’s thanks in large part to unpredictable commodity prices.
What may concern investors more is BP’s no-moat status. That means it’s unlikely to have much of a competitive advantage over peers. Further, Morningstar’s Good says BP stock is trading in 3-star territory and has a fair value of £4.70. But with shares currently trading at around £4.74, there isn’t much to play with. BP’s 5% dividend yield is certainly an incentive for income seekers, but prospective investors will have to wait for the company’s results on Feb. 10 to get a sense of how quickly that share price discount disappears – if, indeed, it does. For Morningstar, I’m Ollie Smith.
