BP shares steady as company plots major changes for green future

British Petroleum has seen its shares go up and down amid rising oil prices, new green investments, and bold attempts to diversify. While the picture is currently unclear, the long-term prognosis for BP shares may be positive.

  • BP shares are up 30% in the past six months
  • Shares currently trading around 330p
  • BP has been buoyed by rising oil prices, which remain at multi-year highs
  • BP is attempting to increase low-carbon investments by 1000% this decade
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What is going on with the BP share price?

The UK-based global oil giant BP has seen its share price fluctuate wildly throughout 2020. Shares initially collapsed to a multi-decade low of 193.44p in October 2020, as the second wave of the pandemic once again shattered demand and caused oil prices to collapse.

In 2021, the story has been very different, with the BP share price being largely buoyed by rapidly rising crude oil prices, as economies reopen and demand skyrockets. Although the BP share price is on track to approach its pre-pandemic levels, its journey so far has been a rocky one filled with volatility.

The company is attempting to forge a brave new future for itself, responding to an IEA report on carbon emissions by promising to increase green investments by 1000% before 2030 and divesting itself of £20 billion worth of oil assets by 2025.

It has been making good on this promise, selling off its stake in North Sea oil assets and potentially preparing for a fire sale of its Iraqi oil facilities. This has undoubtedly affected its short-term growth and dragged down its share price over the course of 2021, but its ability to make good on its promises could be a significant boon for long-term success.

Why are investors feeling bullish on BP shares?

While the short-term outlook for BP shares might appear uncertain, investors and analysts are taking the longer view. The UK investment arm of Barclays recently gave a glowing projection on British Petroleum, arguing that, despite what some quarters of the market might believe, BP's performance is on track to deliver good results and increasing returns for shareholders.

BP has begun walking the walk as well as talking the talk when it comes to its future ambitions. As well as selling off oil assets in Europe and the Middle East, BP is investing in sustainable growth. The company recently joined a multi-national consortium to develop a 2,591km2 wind farm off the coast of Norway, with additional investments in wind farm sites in the UK, US, and Denmark currently in the pipeline.

This comes on top of massive solar farm investments in 12 US states and in Portugal, collectively worth more than £1 billion. Given BP's strong balance book and £3.2 billion in Q1 profits in 2021, it looks increasingly likely that BP will be able to pay for its ambitious plans.

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