UK Energy Shares Drop as Ceasefire Called – BP Trails Shell

Shares of UK listed energy giants BP plc (LON:BP) and Shell plc (LON:SHEL) are facing headwinds as a newly brokered ceasefire in the Middle East sends crude oil prices tumbling, impacting prices on the London Stock Exchange.

The announcement of a tentative ceasefire between Israel and Iran, orchestrated through intense diplomatic efforts led by U.S. President Donald Trump, brought an abrupt end to a period of heightened geopolitical tensions that had previously buoyed oil prices. The news triggered a sharp sell-off in crude futures, with West Texas Intermediate (WTI) crude for August delivery plummeting as much as 5.1% to $65.02 per barrel, levels unseen since before the conflict ignited on June 13th.

This sudden shift in market sentiment has led to a 4.67% drop in BP's share price and a 3% decline in Shell's, making them among the weakest performers on the FTSE 100.

Shell shares, currently trading at 2604 GBp has fared better of the two on the news, and over the past 12 months, albeit with a 6.7% decline. While the stock has demonstrated resilience and stability since the start of 2025, the ceasefire-induced oil price slump poses a significant challenge.

Analysts had previously highlighted Shell's robust performance and resilience in the face of energy price volatility, and its Q2 2025 earnings, expected in late July or early August, will be closely scrutinized for signs of continued strength.

BP shares have pulled back 4.67% to 368.36p, and sit considerably closer to 52 week lows than Shell after a 22% decline in the past 12 months, further exacerbated by the recent oil price decline. While BP, like Shell, has demonstrated a degree of resilience amid crude price fluctuations, its current trading position indicates a weaker overall trajectory compared to its Anglo-Dutch counterpart.

Adding further complexity to the situation are reports suggesting a potential shift in Saudi Arabia's oil production strategy.

Rumors are circulating that the Kingdom may abandon its policy of withholding crude exports to artificially inflate prices towards $100 a barrel. Instead, Saudi Arabia might opt to increase production, even at lower prices, further flooding the market and intensifying downward pressure on oil values.

This potential change in strategy, coupled with the ceasefire in the Middle East, creates a challenging outlook for oil companies like BP and Shell, forcing them to adapt to a rapidly evolving market landscape.

Markets are now carefully assessing the implications of these developments, questioning whether the recent declines represent a temporary setback or the beginning of a more prolonged period of volatility for the energy sector.