Like many other stocks in the energy sector, BP (LSE:BP.) shares have strongly outperformed in 2026 on the back of skyrocketing oil & gas prices.

But with a temporary, albeit fragile ceasefire between the US and Iran coming into place last week, some investors have started selling their shares and locking in profits. In fact, looking at the data from AJ Bell, BP shares were among the most heavily sold on its platform last week.

But with the US and Iran failing to reach an agreement during peace talks on Sunday, where could the BP share price go from here? Let’s look at two different scenarios.

Scenario 1: the war resumes

A high oil price environment for BP is massively powerful. The analyst team at Bank of America have estimated BP needs Brent Crude prices to sit at around $65 per barrel to cover all of management’s planned capital expenditures and shareholder returns simultaneously.

With oil prices expected to stay above $100 per barrel if the war in the Middle East continues, that presents a massive profit windfall for the oil & gas producer.

Of course, some of this benefit will be offset by the group’s lower production volumes coming out of the Middle East. However, unlike its top UK rival Shell, the firm’s assets appear to be less vulnerable, with the business more exposed to logistical challenges rather than production ones.

In other words, while BP’s certainly not immune, it appears to be in a more favourable position, with some analysts projecting the stock could rise to as high as 850p if the conflict continues. Compared to where BP shares are currently trading, that means a £5,000 investment today could transform into £7,365 12 months from now.

Scenario 2: the ceasefire holds

Suppose the US and Iran are able to reach a full resolution, and production coming out of the Gulf States starts to ramp back up? In that case, the current analyst consensus is that oil prices will gradually start to drop towards pre-war prices, likely stabilising near $70 per barrel.

This drop in fossil fuel prices presents a potentially significant challenge for BP shares. While far from disastrous, it brings the firm much closer to analysts’ estimated breakeven price required for management to deliver on all its strategic ambitions.

Combining this with the subsequent production margin compression, BP shares could end up taking a tumble as more investors take their profits from the war-driven rally. And under this scenario, analysts estimate that BP shares could end up sitting closer to the 450p mark, turning £5,000 today into around £3,900.

The bottom line

All things considered, BP looks like a leveraged oil & gas investment right now. If prices rise, the upside potential is far more impressive compared to other FTSE stocks in this sector. But similarly, if prices fall, the losses for investors could be more severe – it’s a classic higher-risk/higher-reward investment in April.

Personally, with so much uncertainty surrounding this sector, BP isn’t a stock I’m rushing to buy today. But for investors with a higher risk tolerance and seeking exposure to the oil & gas sector, it could be a stock worth investigating further.