Occidental Petroleum: Buy, Sell, or Hold?

Occidental Petroleum (NYSE: OXY) sells oil and natural gas, so the geopolitical conflict in the Middle East is likely to boost its earnings. As you would expect, reducing global oil and natural gas supply has increased their prices. That is good news for Oxy as it continues to chart a path toward growth. Here’s a look at the buy, sell, and hold call.

Interestingly, the reason to buy Oxy isn’t really about today’s high energy prices. The energy sector is volatile, and oil and natural gas prices frequently rise and fall in dramatic fashion. High oil prices will clearly be a near-term benefit, boosting the company’s revenues and earnings. However, the real story here is long-term business growth.

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Oxy telegraphed its growth plans when it outbid Chevron (NYSE: CVX) to buy Anadarko Petroleum a few years ago. Simply put, Oxy wants to compete with the industry’s largest competitors. The company has made additional acquisitions since that point, including a business focused on carbon capture and another energy company. It also sold its chemicals business, which helped the company to pay down debt.

Debt is an important factor here. A high debt load after the Anadarko deal forced Oxy to cut its dividend when oil prices fell shortly after the acquisition closed. It appears that Oxy is working from a much stronger financial position today. That fact, along with higher commodity prices, should be highly supportive of the company’s long-term growth plans. If you are looking for a growth-oriented energy investment, Oxy could be a good option with one small caveat.

The problem with Oxy right now is related to high energy prices. The stock has risen more than 35% so far in 2026, and it is only late April. That’s a very swift advance in a very short period of time and suggests that emotions are driving investor sentiment. The obvious reason is the geopolitical conflict in the Middle East, which has driven oil and natural gas prices higher.

Commodity prices will likely begin to fall once the conflict ends. That will likely prompt investors to move away from oil and natural gas producers like Oxy. So there is a material near-term risk that Oxy’s stock price could drop. Notably, the stock is already down more than 10% from its March highs. If you aren’t thinking long-term with Oxy, you might want to sell now and lock in your gains.

Story Continues

The decision to hold Occidental Petroleum is roughly the same as the reason to buy it: long-term business growth. That said, if you don’t already own it, a deep oil price decline would probably offer you a better buying opportunity. If you do own it, and perhaps have for years, the recent stock price advance shouldn’t faze you one bit. It is just another normal swing you should be expecting in the highly volatile energy sector.

However, as noted, upswings like this are good for companies like Oxy. While it may not rush out to buy another business, strong revenues and earnings could allow it to further strengthen its balance sheet. That, in turn, will give it the wherewithal to step in and buy assets when oil prices are low. In other words, the growth story isn’t over yet, and today’s high oil and natural gas prices only strengthen Oxy’s long-term growth opportunity.

Looking at the whole picture, Occidental is an attractive growth-oriented oil and natural gas company. But the stock price has moved higher quickly, mostly on investor sentiment driven by Middle East tensions. If you are a long-term investor and you own Oxy, there’s no reason to sell it. If you are focused on the short-term, selling to lock in gains could be a good call.

And if you are a long-term investor who doesn’t own Oxy yet, you might want to keep it on your wish list, waiting to buy it during an energy downturn when the price is likely to be more attractive. Buying Oxy today wouldn’t be a mistake, per se, but you would likely be paying a premium to own it.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

Occidental Petroleum: Buy, Sell, or Hold? was originally published by The Motley Fool

Occidental Petroleum: Buy, Sell, or Hold?

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