Analyst Warns of Risks Despite BP's Surge Amid Iran War and High Oil Prices

BP shares have surged significantly in 2026, driven by the ongoing Iran war and oil prices reaching $107 per barrel. The company reported a doubling of underlying profits to $3.2 billion in the first quarter, boosted by exceptional trading performance and strong refining demand. However, analyst Harvey Jones urges caution for potential Investors in Stocks and Shares ISAs, suggesting the stock may be near the top of its cycle. Key risks include the potential reopening of the Strait of Hormuz, which could crash oil prices, and the threat of increased windfall taxes by politicians responding to public pressure over high energy costs. Additionally, BP's earnings remain volatile, as seen in historical fluctuations, and its share price is sensitive to political rhetoric, particularly from Donald Trump. While the current dividend yield is attractive at approximately 4.6%, Jones advises that the commodity cycle poses significant downside risk. He recommends careful monitoring rather than immediate buying, noting that diversification benefits must be weighed against the possibility of sharp price corrections if geopolitical tensions ease or regulatory pressures increase.