FTSE 100 oil giants BP and Shell have regained favour with analysts as oil prices surge on escalating tensions in the Middle East.
Shares in both companies climbed around three per cent over the past week, with further gains seen as former U.S. President Donald Trump issued strong statements regarding the ongoing conflict between Israel and Iran.
Russ Mould, investment director at AJ Bell, attributed the uptick in oil to “concerns the US might join Israel’s military effort against Iran,” which he said directly boosted shares in Shell and BP.
Oil prices briefly rose above $77 per barrel before easing slightly, as Trump warned that the United States’ patience with Iran was “wearing thin.”
Neil Wilson, a UK investor strategist at Saxo, noted that oil majors were key in “keeping the [FTSE 100] in better shape than European peers,” with the UK index outperforming on the strength of its energy sector.
Shell, the second-largest company on the FTSE 100, holds a market capitalization of £158.5 billion. BP, in eighth place, is valued at nearly £62 billion. Their sizable weightings on the index mean that their share movements significantly impact the FTSE 100’s overall performance.
Oil Sector Rebounds After Weak First Quarter
Kathleen Brooks, research director at XTB, said energy stocks were the main force behind this week’s stock market gains, with the FTSE 100 closing at 8,902.34 on Monday thanks to the sector’s strength.
The recovery follows a difficult first quarter for oil firms. Both Shell and BP struggled as crude prices declined amid geopolitical uncertainty. Shell’s adjusted earnings fell to $5.58 billion (£4.2bn), down from $7.73 billion in the same quarter of 2024. BP, meanwhile, was forced to reduce its share buyback programme to $750 million, down from $1.75 billion in the previous quarter.
This downturn followed a slump in Brent crude, which dropped below $70 per barrel after tariffs introduced by Trump.
In a further sign of volatility, reports earlier this year suggested Shell was considering a takeover of BP after the latter’s share price plunged more than 30 per cent over a 12-month period.
BP also faced internal strife during its annual general meeting in April, where a shareholder rebellion erupted in response to the company’s pullback from its environmental commitments.
