April has been rough for the BP (LSE:BP.) share price. In fact, since this month began, shareholders of the energy giant have seen close to 25% of their investment wiped out as of last week. But given the long-term demand for energy isn’t going anywhere, does this present a buying opportunity for long-term investors?
Analysts have mixed opinions
There are a few factors behind the recent slide in the BP share price. Fears of a global recession courtesy of President Trump’s tariff announcement sparked a general sell-off in the markets. However, the impact was compounded by Saudi Aramco’s decision to cut the price of oil per barrel by $2.30 for May deliveries to Asia.
Pairing this with the announcement that OPEC+ is boosting production to 411,000 barrels per day next month triggered an 11% downfall in crude oil prices. For reference, this is three times more than the production hike analysts were expecting.
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Needless to say, as an oil & gas producer, falling oil prices are not good news for a business like BP. Even more so, given management’s recent pivot back to fossil fuels away from renewables earlier this year.
With that in mind, it’s not so surprising to see 14 of the 24 analysts following this enterprise issue a Hold recommendation. Despite this neutral opinion, the average 12-month share price target for BP stands at 470p. That’s around 30% higher than where the stock’s currently trading, suggesting that a £5,000 investment today could be worth £6,530 by this time next year.
But if the bulk of analysts are saying to Hold, why are the shares projected to climb?
Digging deeper
One possible explanation behind the chunky expected capital gain is that BP shares are relatively cheap at the moment. On a forward price-to-earnings basis, the stock’s only trading around 8.4, offering a notable 6.9% dividend yield to boot.
Alternatively, the share price forecasts may simply be out of date. These latest projections were made on 3 April before the tariff and oil price shenanigans entered the picture. And if oil prices remain depressed throughout the rest of 2025, BP’s revenue and bottom line could fail to meet full-year targets.
This uncertainty explains the relatively neutral position analysts are taking right now. However, this may not be a massive issue. The proceeds from selling its underperforming renewables projects today are raising some welcome capital that’s earmarked for debt reduction. With a stronger balance sheet, BP’s better positioned to weather through cyclical downturns of oil & gas prices.
Overall, I think BP’s future still looks bright. But whether now’s the right time to jump in remains uncertain. Investors seeking exposure to the energy sector will need to weigh the risks against the potential for a BP share price rebound.
