The BP (LSE: BP) share price dropped below 400p earlier this week. Historically, that’s a level that’s only generally been seen during troubled times for the company.

This year’s slump has pushed BP’s dividend yield up to 6%. I’m wondering whether this slump could be an opportunity to add the oil and gas giant to my income portfolio.

Why are the shares falling?

Uncertainty in the Middle East has led to increased oil price volatility this year. Any major disruption to supplies could cause prices to rise.

The oil price has swung around as speculators have bet on different scenarios. Brent Crude oil reached $90 per barrel in April, but has fallen to $74 per barrel at the time of writing.

Another complication is that weaker global demand for refined products such as petrol and chemicals is also hitting BP’s profits.

In its third-quarter update, BP warned that profits from its refineries fell by $400m-$600m during the third quarter.

Are we heading for another oil crash?

Over the last 16 years, I’ve seen the oil market crash on three occasions (2008, 2015 and 2020). That’s not what’s happening now. So far this year, we’ve just seen a moderate slowdown.

According to the September edition of the authoritative IEA Oil Market report, the main reason for this is “a rapidly slowing China”, where oil consumption has been falling in recent months.

At the same time, the IEA says that global oil supply has been rising, despite some outages in Libya and Norway.

The reality is that no one quite knows what will happen next. Lower oil prices might stimulate stronger demand, but this isn’t guaranteed. A deeper slump might be needed to rebalance the market.

A lot depends on what happens in China — something that’s tough to predict.

Is BP cheap enough to buy today?

Bumper profits since 2021 have allowed BP to rebuild its dividend and repay debt. The company has also funnelled billions of dollars into share buybacks – the share count has fallen by a quarter since the end of 2021.

I think BP is probably in better financial health than it’s been for a long time. Even in another crash, I think the company would be likely to cope better than it might have done in the past.

I’m also encouraged by CEO Murray Auchincloss’s commitment to “a resilient dividend”.

In the company’s half-year results, Auchincloss said that the payout should be supported by cash generation at oil prices down to “around $40 per barrel Brent”.

City analysts’ earnings estimates also suggest to me that the dividend will remain safe, barring a major market crash.

The latest broker forecasts for 2024 indicate that earnings of $0.64 per share should be enough to cover the expected dividend twice. That’s generally considered a decent safety margin and gives me confidence in the 6% yield on offer.

On balance, I think the shares look reasonably priced today and probably offer a safe dividend.

However, my sums suggest they’re are not at a truly bargain basement level.

Given the uncertainty facing this business, I’m going to wait a little longer before making a decision.