FTSE 100 shares round-up: BP, Shell, Rolls-Royce, BAE Systems
In another volatile session split evenly between risers and fallers, City writer Graeme Evans explains what’s driving sentiment at some of the big blue-chip names.
16th December 2025 13:14
by Graeme Evans from interactive investor
The cheapest Brent crude price in five years today weighed on BP (LSE:BP.) and Shell (LSE:SHEL) as the oil majors joined Rolls-Royce Holdings (LSE:RR.) and BAE Systems (LSE:BA.) among the laggards of a weaker FTSE 100 index.
Share price movements in the energy and defence sectors were influenced by last night’s indication from Washington that a Russia-Ukraine peace deal has moved a step closer.
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Brent crude fell by more than 1.5% to below $60 a barrel as traders positioned for the potential return of Russia oil at a time when the market is dominated by oversupply fears.
The price of the international oil benchmark is now cheaper than it was in the aftermath of Liberation Day tariffs and at its lowest level since early 2021.
The retreat adds to City jitters over the industry’s ability to sustain the current level of shareholder returns, particularly buyback programmes.
BP shares have fallen by more than 7% since early December, while Shell is down by about 5% over the same period. Both stocks remain higher over the year to date.
Share repurchases at Shell make up 62% of its shareholder distributions, with the oil major on track to have reduced its 2025 share count by 29% versus 2021 levels.
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The current rate is $3.5 billion (£2.6 billion) a quarter, which UBS recently forecast will be scaled back to $3 billion in February’s annual results.
The City bank notes that Shell has the European oil industry’s lowest dividend breakeven point at $43 a barrel, a level that excludes the impact of disposals or working capital.
BP, whose shares have been lifted in recent months by the back-to-back release of forecast-beating results, has a buyback programme worth $750 million a quarter.
The oil industry’s share price weakness meant the FTSE 100 index surrendered some of Monday’s 1.1% advance to reach lunchtime 0.5%, or 46.09 points lower at 9,705.
The apparent progress in Ukraine peace talks prompted investors to lock in some of their gains from this year’s strong performance by Babcock International Group (LSE:BAB) and BAE Systems.
The latter’s shares have fallen by about a fifth since they topped 2,000p in early October, although they are still up more than 40% in 2025.
Rolls-Royce fell 18p to 1,096p in today’s session, despite underlining its confidence in prospects with a £200 million extension to its share buyback programme.
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The repurchases will be on the top of the £1.9 billion returned to shareholders in 2025, which includes dividends and £1 billion of buybacks.
The new buyback gets under way on 2 January and will run until annual results on 24 February, when the company is due to announce its distribution plans for 2026.
Shares peaked at 1,196p in late September but have since drifted to 1,095p, partly due to disappointment that a recent trading update contained no new buybacks.
Bank of America recently lifted its price target on Rolls shares to 1,615p as it highlighted an improving outlook for shareholder returns in the coming years.
It added: “We expect another strong year for Rolls-Royce, with upside to the group's mid-term free cash flow guidance as execution continues to exceed expectations.”
Among today’s FTSE 100 risers, InterContinental Hotels Group (LSE:IHG) rallied 125p to 10,460p after the same bank sweetened its price target to 11,700p.
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The bullish stance reflects hopes of a much-improved year for US revenues per available room, driven by the demand boost of the FIFA World Cup and America250 events.
The bank said that the valuation is undemanding compared to US peers, with the next year set to see the return of 6% of current market cap through a $1.2 billion dividend plus buybacks.
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