I had a dream about BP (LSE:BP) share price last night. It was actually a bit of a nightmare because so much went wrong for FTSE100 oil giant. Will I sleep easier if I sell?

These are hard times for BP. Over the past 15 years, the company has faced the Deepwater Horizon disaster and subsequent costly investigations, major writedowns in Russia, leadership changes, a failed renewables transition, and unstable earnings and dividends. No wonder I couldn’t sleep well.

Volatile FTSE 100 shares

I woke up ready to run and then I remembered something. This is still an excellent stock generating a dividend and a yield of 5.6%. But will this be enough to compensate for the volatile share price? BP shares are up just 1.3% over the past year and are down 10% over three years.

I was still willing to sell BP and utilize the cash to top up my stake in the FTSE 100 dividend hero Legal and General Groupbut something stopped me. This morning, the price of Brent crude rose by $65 a barrel on renewed concerns about Venezuela, Iran, Ukraine and global supplies. I expected BP’s share price to rise with this and abandoned plans to sell.

But instead of rising, the company’s shares fell as BP warned of an impending $5 billion impairment charge in the fourth quarter, mostly “related to its energy transition business and weekly crude oil trading.” It’s so BP.

Energy stocks like BP are subject to shocks and surprises. Just look at what happened after Putin invaded Ukraine in 2022: the price of oil exploded, BP shares followed suit, and then both fell as Europe weaned off Russian energy. Stocks rose last week as markets saw a huge opportunity in Venezuela, then quickly retreated when they didn’t see one.

Analysts are relatively positive about the year ahead, with a consensus one-year price target of 502p. If true, this is approximately 16% above today’s 432.5p. A projected rate of return of 5.8% gives a total return of 21.8%, meaning a £10,000 investment would turn into £12,180. Although given the fluctuations I’ve described, this is by no means guaranteed.

There are reasons to be positive about BP. It generated $27.3 billion in operating cash flow in 2024, despite dwindling profits due to lower refining margins and trading performance. In addition to the dividend, management has enough cash to fund a $750 million quarterly share repurchase.

Taking the long term into account

While the world is slowly transitioning to renewable energy sources, it still needs oil and gas to manage this transition. In addition, BP has recently made several major discoveries, especially in Brazil.

Due to concerns about climate change, many investors will not want to deal with BP at all. And BP has been mismanaged for years. Turning this tanker around won’t be straightforward.

But I’m still thinking long term, so it’s worth considering this as part of a balanced portfolio. I definitely won’t sell, oil and gas is a key sector and I have no other contact with it.

As always, it is crucial to take a long-term view. The huge question is not where BP shares will go today or tomorrow, but in five or 10 years. For me, the income and long-term potential make it worth keeping, even if the daily fluctuations sometimes keep me up at night.