The BP (LSE:BP) share price has had a good run in 2025. Nothing special, it’s up a modest 12%, but not too drastic either, especially when you add in the 5.5% dividend yield.

Results looked better a month ago, but the stock has dropped 7% since then and as a shareholder, I have an uneasy feeling that we’re in for a lot more trouble in 2026. In fact, I fear that BP is in for a major downturn.

It wouldn’t be the first time. The Deepwater Horizon tragedy in 2010 cast a shadow on the business for years. Then the pandemic hit and pushed oil below $30 a barrel, hitting all oil stocks. Prices soared in 2022 when Russia invaded Ukraine, then fell as Europe found replacement energy sources, only U.S. tariffs caused further volatility.

Volatile FTSE 100 giant

My story shows how BP is at the mercy of events beyond its control. Mistakes were also made, especially humiliating debates over whether to dive into renewable energy sources or stick with classic fossil fuels.

Today I’m worried about something BP can’t control: a potential oil glut. Crude oil has been falling for six months on lower demand and ample supply. It is now suffering its worst week in two months after fresh warnings of oversupply in 2026 pushed the price of WTI crude below $60 a barrel. The International Energy Agency tried to composed nerves by adopting a more positive attitude, but traders were too busy selling to notice. If that happens, 2026 could be a brutal year.

On A motley foolwe believe in buying stocks for the long term rather than trying to guess oil price movements. There are just too many moving parts. However, we like to take advantage of short-term declines to buy our favorite stocks at discount prices and deliver higher yields on top of that. This can work particularly well in a cyclical sector such as energy. However, it requires patience and sturdy nerves, because struggling stocks rarely bounce back overnight.

Decent value, high dividend yield

In the past, oil oversupply corrected itself, crowding out marginal producers while lower prices revived demand. However, we cannot be 100% sure that this still applies. The world is no longer as dependent on oil as it once was. Renewable energy sources are getting cheaper every year. This leaves BP more vulnerable, especially as it has doubled its investments in fossil fuels. There has been a recent backlash against net zero, but the tide could also be turning.

BP doesn’t look crazy costly with a price-to-earnings ratio of 14.6. Analysts estimate that throughout 2025, the company’s shares will gain 5.4%, and in 2026 – 5.73%.

It still has 26 billion in debt, although management is reducing it through sales. Share buybacks remain at $750 million in the quarter, which is reassuring, but I still think next year looks uncertain. I’m not loading up my stake at today’s level, but I’ll be ready if the stock drops enough. Long-term investors may consider purchasing BP shares today, but should prepare for a vigorous 2026.