After the United States attacked Iran on Saturday, March 27, global stock markets began to fall from their 2026 highs. The latest war in the Middle East triggered another oil shock that sent energy prices skyrocketing around the world. However, as oil prices rose, so did they BP (LSE:BP) share price. Unfortunately, it wasn’t always simple for BP shareholders.

BP stock exchange

BP shares hit a 52-week low at 337.65p on May 1, 2025. This would be a great time to buy the British oil and gas giant, whose shares have been soaring ever since.

On Friday 17 April, BP’s share price closed at 541 pence, valuing the former British Petroleum company at £91.9 billion. This makes BP the ninth largest company in the world FTSE100 index. However, shares fell 43p (-7.4%) on Friday, tracking the price of southern oil as geopolitical tensions eased.

Still, BP shares rose 50.5% in one year and 85.2% in five years, easily beating Footsie in both periods. Moreover, the above data do not take into account cash dividends that flow freely from BP’s coffers to shareholders’ bank accounts.

BP: massive payouts

Disclosure: My family portfolio holds BP shares, which paid 484.1 per year for our shares in August 2023. What made us decide to buy the UK’s second largest energy company? First, we bought BP stock, partly as a hedge against higher oil prices. Secondly, to take back some of BP’s gushing dividends.

Following the recent sudden drop in BP’s share price, the company’s shares offer the best dividend yield on the market at 4.5% per annum. This is 50% more than the 3% per annum offered by the broader FTSE 100 index.

Furthermore, we do not issue a quarterly BP dividend. Instead, we reinvest this passive income by purchasing even more shares. This increases our stake in the companies, helping to escalate future profits as owners of BP.

BP: bumpy periods

On the other hand, the last five years have been a challenging period for BP shareholders at times. The chart of five-year stocks resembles the teeth of a saw: the price rises, then falls, before rising sharply over the last 12 months.

To be truthful, I’m not particularly elated after 32 months as a BP shareholder. To date, we maintain a tiny paper profit of 11.8% of our initial investment. This is not a great return if you take the risk of investing in a fossil fuel business. That said, patiently reinvesting our dividends for almost three years has increased our returns.

To sum up, the purchase of BP shares largely met my expectations. It provides above-market income while providing a useful hedge against higher energy bills. However, this stock has been much more volatile than I expected as the price of crude oil has been bouncing up and down since mid-2023.

Finally, I expect energy stocks to remain highly volatile until there is a lasting truce in the US/Israel-Iran war. If a constant ceasefire is agreed, oil prices – and BP’s share price – could fall again. Moreover, BP continues to face the ultimate challenge of transitioning away from fossil fuels to renewable energy, which will not be an simple task!