After the significant increase witnessed last year baby (LSE: BP.) Shares suddenly lost momentum. If an investor had put £5,000 into the oil giant two days ago when its share price was at 600p, that capital would now be worth around £4,775.

So, is the pool game over here? Or is this just a temporary withdrawal?

After oil prices

It’s not hard to see why BP shares have risen recently, and why they’re falling now. This year, oil prices have risen amid conflict in the Middle East and the closure of the Strait of Hormuz – a vital oil transport route.

On several occasions, Brent crude oil traded near $110 per barrel, after starting the year near $60. Obviously, this price level translates into much higher profits for oil producers like BP.

However, since the US and Iran agreed to a two-week ceasefire, oil prices have fallen sharply, with Brent crude falling to a low of $91 per barrel at one point. As I write, it’s $97.

This decline has negative effects on BP. That’s why the stock price fell.

The problem of oil stocks

The volatility of stock prices highlights a major problem with oil stocks: they are unpredictable. Ultimately, they are a bit speculative because their fortunes are tied to oil prices, which can be very volatile.

When oil prices rise, it’s usually a great thing for stocks. However, if oil sees a sudden decline, stocks are likely to suffer.

What’s next for BP?

As for where BP stock will go from here, it’s hard to predict. Much will relate to the geopolitical situation and, more specifically, the situation in the Strait of Hormuz.

If we see a significant de-escalation, I expect oil prices to fall, putting pressure on BP’s stock price. But I do not expect the price of oil to return to $60 per barrel in the blink of an eye, as it may remain high for months or even years.

Alternatively, if things escalate, oil prices could rise, boosting stocks. It is worth noting that the rebound from $91 to $97 indicates that the ceasefire situation is fragile and the situation in the Strait of Hormuz is complex.

So, for investors, there is definitely an element of speculation here. One really needs to look at what will happen to oil in the short and long term (don’t forget the risks of decarbonisation).

Is there any value left?

Focusing on financial metrics, BP shares currently trade with a forward-looking price-to-earnings (P/E) ratio of about 12.5, using this year’s consensus earnings forecast. However, these expectations may be far from reality given the recent volatility in oil prices, so I don’t think this metric is very useful at the moment.

Perhaps the most useful value indicator for investors is the dividend yield. This percentage is about 4.5%, which is a good percentage, but not high (and not as attractive as it has been in recent years).

Given the yield, the stock could still be worth considering. One way to look at this stock could be as a hedge against geopolitical instability.

However, looking at the long term, I think there are better opportunities to consider in the market. Personally, I focus on other high-quality stocks that have it He fell In recent sales.