BP share price being sustained by oil as company transitions to renewables

BP Share Price

The BP share price (LON:BP) has given away 0.89% at the time of writing on Wednesday as speculation over an oncoming upwards surge mounts around the oil giant. It has been a pretty solid year so far for the FTSE 100 company which is up by 17.78%, as oil prices have increased on a resurgence in demand.

While the price of oil and environmental concerns remain a threat to the BP share price, the company has a plan to see it through the coming months. This is causing many analysts to tip BP as being one to watch. Stockopedia reported this week that the BP share price has 6 Buy, 10 Hold and 0 Sell recommendations from analysts.

Oil

For now, the oil price is approximately at its pre-pandemic level, which bodes well for BP.

The International Energy Agency said last week that raised demand for crude oil switched back in July and it now expects demand for the commodity to rise at a slower rate for the remainder of 2021. This is down to the prevalence of the Delta variant of the coronavirus.

The news raises question marks over the near-term outlook for oil after Joe Biden called on OPEC and its allies to raise its levels of output in a bid to keep rising fuel prices under control, as inflation in America reaches its highest yearly growth rate in 13 years.

However, some analysts remain bullish on the commodity despite some recent bad news.

Bank of America commodities strategist Francisco Blanch is making the case of $100 per barrel oil in 2022 as supply will begin to fall.

While the longer-term outlook remains uncertain, for now, the BP share price will be sustained by raised oil prices. Its goal will be to use its revenues to smoothly transition into the future of renewable energy.

The Future

Bernard Looney, the BP chief executive, has continued to redirect the company towards renewable energy since he took up his position last year.

Higher oil prices, on which BP remains reliant, have allowed the company to increase its investment in offshore wind, solar energy and hydrogen.

This in itself could be the source of additional investment for the FTSE 100 oil giant.

Taking advantage of current oil prices, while not waiting too long to transition, will be a key play which could influence the BP share price over the coming months.