The US government’s decision to impose new sanctions on Russian oil entities Rosneft and Lukoil has pushed Occidental Petroleum (OXY) shares higher. Investors anticipate a boost for US oil producers from rising crude prices.

See our latest analysis for Occidental Petroleum.

Occidental Petroleum’s recent rally has been fueled by the expected lift to oil prices from tighter Russian supply, but it follows a period of lackluster performance. While the stock has rebounded this week, with a 2.76% 1-day and 4.48% 7-day share price return, its share price return remains down 13.91% year-to-date. The total shareholder return over the last year stands at -14.76%. Despite solid balance sheet improvements from strategic asset sales, the longer-term momentum is still searching for its next spark following a strong five-year total return of nearly 396%.

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With shares catching a lift from global energy disruptions, the central question for investors is whether Occidental Petroleum remains undervalued after its recent rebound or if the market has already priced in all future growth potential.

Occidental Petroleum’s most-watched valuation narrative suggests the stock is trading well below fair value, with the last close at $42.88 compared to a stated fair value of $55.05. This large disconnect creates a compelling backdrop for those weighing OXY’s position after its recent rally.

OXY is a pioneer in CCS, investing heavily in Direct Air Capture (DAC) technology and related infrastructure such as the STRATOS facility in West Texas. They aim to make CCS a substantial part of their business.

Read the complete narrative.

What if the world’s push for carbon capture transforms OXY’s entire business? The real secret behind this high valuation lies in ambitious low-carbon bets and profit margin upgrades. Want to know the number one driver that could dramatically lift OXY’s earning power? The details in the full narrative will change how you think about oil and gas valuations.

Result: Fair Value of $55.05 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, slower progress in CCS commercialization or unexpected drops in oil prices could quickly dampen OXY’s current valuation optimism.

Find out about the key risks to this Occidental Petroleum narrative.

If you have a different take or want to piece together your own story from the latest numbers, you can build a narrative yourself in just minutes with Do it your way

A great starting point for your Occidental Petroleum research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include OXY.

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