BP (BP) SHARES: 2025 PERFORMANCE IN UK, KEY DRIVERS, MILESTONES AND RISKS —'26 OUTLOOK

How did BP shares perform in 2025 in the UK?

In 2025, BP plc (LSE: BP) demonstrated a mixed overall share performance within the London Stock Exchange, shaped by a combination of macroeconomic factors, fluctuating oil markets, new policies targeting green energy transition, and company-specific developments.

BP’s share price started 2025 at approximately 480p and experienced periods of volatility, peaking around 515p in April due to a surge in Brent crude oil prices and strategic developments in upstream operations. However, pressures from global decarbonisation efforts, as well as a broader push from investors towards ESG-friendly portfolios, pulled shares back to trade in the 465–475p range by year-end, yielding a modest annual gain of around 2%.

The company's performance was underpinned by a resilient post-pandemic energy demand recovery, especially from Asian markets, and stabilised refining margins. However, concerns over excess oil supply and declining fossil fuel demand in developed nations capped stronger upside potential.

BP also restructured parts of its upstream portfolio during the year, selling marginal assets to strengthen its capital structure and accelerate the pivot to renewable energy. These divestments were met with mixed investor reactions, as some stakeholders questioned the pace of green transformation versus core profit contribution.

Quarterly earnings remained largely stable, with full-year EBITDA coming in slightly ahead of 2024, propelled by efficient cost management and favourable exchange rates. Dividend growth remained unchanged, holding steady at 7.27p per share per quarter, reaffirming management’s commitment to return capital to shareholders.

For retail and institutional investors in the UK, BP’s 2025 performance reflected the broader trend of legacy energy providers attempting to balance current profitability with future sustainability narratives. It also highlighted cyclical dependencies that remain critical in the share’s valuation trajectory.

Key Highlights of BP’s 2025 Performance

• Share Price Movement: Opened the year at 480p, closed around 472p.
• Dividend Yield: Held at approx. 4.9%, reflecting income investor appeal.
• Oil Prices: Brent crude fluctuated between $72 and $89, heavily influencing BP’s revenues.
• Green Investments: Increased capital allocation to renewable assets, now exceeding £3.5bn annually.
• Operational Adjustments: Asset sales, job restructuring, and upstream consolidation to boost margins.

What were the key drivers and risks influencing BP’s share price in 2025?

BP’s 2025 stock performance in the UK was shaped by a confluence of evolving energy macro-trends, strategic execution, policy shifts, and geopolitical developments. BP, being a multinational integrated energy giant, remains exceptionally exposed to both external and internal variables that impact its performance.

Growth Drivers:

1. Crude Oil Market Dynamics

Global oil prices remain a primary determinant of BP’s profitability, particularly in upstream operations. In 2025, Brent crude remained volatile, experiencing rallies connected to OPEC+ supply cuts and geopolitical tensions in the Middle East. BP leveraged its global upstream footprint to capitalise on spiking prices, particularly in African and American operations.

2. Renewables and Low-Carbon Solutions

BP intensified investments in green hydrogen, biofuels, and offshore wind, especially within the UK and Europe. While still only a fraction of total revenue, these segments received strong investor interest as ESG investment mandates grew. Government incentives under the UK Government’s Net Zero Strategy (enhanced in 2025) provided a boost, particularly in offshore wind licensing and subsidy allocation.

3. Cost Optimisation and Digitalisation

Operational efficiency gained prominence as BP embraced AI-based exploration mapping, real-time modules for supply chain control, and digital twins in refinery operations. These innovations marginally improved net margins, offering long-term hedge against price volatility.

1. Regulatory and Litigation Risks

In 2025, enhanced regulatory scrutiny in Europe and the UK, particularly regarding emissions reporting and greenwashing regulations, posed non-trivial risks. BP was under investigation in Q3 for overstated carbon offset claims, which dented investor confidence temporarily.

2. Execution Risk in Green Portfolio

While pivoting towards renewables aligns with long-term goals, BP’s capital-intensive green projects face duration and return uncertainties. Projects in the North Sea and Iberian Peninsula experienced cost overruns amid supply chain fragility.

3. Societal and Geopolitical Concerns

Strikes in BP’s UK-based refineries and tank farms, as well as civil unrest in project areas overseas (notably in West Africa), disrupted operations marginally. Meanwhile, political instability in oil-producing nations continues to add uncertainty to production forecasting.

Investment Outlook

Despite short-term operational and regulatory headwinds, BP’s integrated model, cash-flow resilience, and strategic portfolio shifts have retained investor interest. However, the path forward remains sensitive to global trends and domestic legislative developments, which remain central to valuating BP shares for 2026 and beyond.

What milestones did BP achieve in 2025 and what could affect 2026 outcomes?

BP achieved several operational and strategic milestones in 2025, reinforcing its dual commitment towards legacy energy operations and long-term green transition. These milestones set the tone for investor expectations and potential share price movements in 2026.

Key 2025 Milestones

• Net Zero Progress: Reductions in absolute emissions by 10% (scope 1 & 2) compared to 2022 baseline, driven by operational upgrades in North Sea platforms and asset retirement in Canada.
• Renewable Portfolio Expansion: Added over 1.8 GW of installed renewable capacity, with focus on UK offshore wind (Dogger Bank expansion) and Iberian solar energy projects.
• Strategic Partnerships: Finalised collaborations with Equinor and Iberdrola for offshore wind, and hydrogen production initiatives in Hull and Aberdeen.
• Divestment Programme: Exceeded the planned $3.5 billion in asset disposals for the year, releasing capital for reinvestment and balance sheet strengthening.
• Digital Transformation: Scaled use of AI and blockchain throughout logistics and exploration departments to improve agility and margin capture.

What to Watch in 2026?

Looking ahead into 2026, several key themes could shape BP’s trajectory in the UK and globally.

• Oil Price Stabilisation: Consensus forecasts suggest moderate crude oil prices around $80/bbl, lessening the massive profit margins from previous years but offering steadier cash flows.
• Carbon Pricing & UK Legislation: The UK may introduce a tighter framework under its Emissions Trading Scheme, while EU standards could have extraterritorial implications for North Sea operations.
• Renewables Profitability: Investors will watch closely for early returns and EBITDA contributions from BP’s renewable projects. Cost discipline and delivery timelines will shape sentiment around the green strategy’s credibility.
• Inflation and Interest Rates: With the Bank of England maintaining a cautious rate-cutting stance, capital costs for infrastructure projects could impact near-term ROIs for BP’s renewables push.
• Geopolitical Stability: Protracted tensions in oil regions or disruptions in the Red Sea or Suez Canal could spike supply-chain costs and alter production schedules, having knock-on effects for share valuation.

Conclusion for UK Investors

BP’s 2025 performance reflected the complexities of managing legacy energy production while leading the energy transition. Despite modest share price appreciation, the company’s structural evolution — emphasising renewables, operational efficiency and emissions reduction — places it favourably for long-term resilience. However, 2026 poses significant tests: whether these plans can translate into measurable profitability and if BP can navigate regulatory and market fluctuations effectively.

For UK investors, BP remains a strategic holding in diversified portfolios, particularly for those targeting dividend sustainability and exposure to the energy sector’s transition narrative. Close monitoring of project execution, commodity cycles, and Europe-focused policy shifts will be essential in 2026.