Occidental Petroleum Stock Rocketed 38% in 2026 (But the Big Move Came in March)

Occidental Petroleum (NYSE: OXY), also known as Oxy, has seen its stock rally about 38% year to date. Most of those gains came from its 22% gain in March. Let's see why the oil and gas company's stock attracted a stampede of bulls, and if it's still worth buying today.

What happened to Oxy over the past few years?

Oxy is primarily an upstream company, which handles the exploration, drilling, and extraction of oil and natural gas. It also owns a smaller midstream business that handles the pipelines and infrastructure for transporting those resources, as well as a low-carbon ventures business.

Image source: Getty Images.

In 2019, Oxy acquired Anadarko, another upstream and midstream company, for $55 billion. It closed that acquisition just before oil prices plummeted during the pandemic, and its debt levels soared. As a result, Oxy's stock sank to its lowest levels in over two decades.

To offset that pressure, Oxy restructured its business, reduced its debt, and repurchased more shares to boost its EPS. However, its upstream business still needs oil prices to rise so its revenue growth can outpace its expenses. Unfortunately, the price of West Texas Intermediate (WTI) crude oil -- which Oxy is heavily dependent on -- declined by 20% in 2024 and 2025. During those two years, Oxy's stock declined 31% as the S&P 500 rose 44%.

Why did Oxy's stock rally this year?

Three catalysts drove Oxy's stock higher this year. First, it closed the sale of its chemical business, OxyChem, to Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB), its top investor, for $9.7 billion in cash in January. It immediately used those proceeds to reduce debt by $5.8 billion, bringing it to its target debt level of about $15 billion.

Second, the price of WTI crude oil soared 76% year to date to about $100 per barrel -- well above its breakeven price of around $60 per barrel. Most of those gains occurred after the U.S. and Israel launched airstrikes against Iran at the end of February, triggering a regional war and blockades of the Strait of Hormuz -- which handles about 25% of the world's maritime oil trade.

If oil prices remain at these levels or rise further, Oxy will generate even more cash to reduce its debt, buy back more shares, and increase production in the Permian Basin and the Gulf of Mexico. That might be why Oxy's insiders bought nearly three times as many shares as they sold over the past year, and why Berkshire bought even more shares over the past three years.

What are Oxy's near-term catalysts?

For 2026, analysts expect Oxy's revenue and EPS to rise 23% and 164%, respectively. That would finally end its three-year streak of declining revenues and earnings.

That rosy outlook assumes oil prices will stay elevated this year as the Middle East conflict continues. But if the Middle East conflict ends and oil drops below $60 per barrel, Oxy could quickly give up its big gains as analysts reduce their near-term forecasts.

At $56, Oxy's stock still looks like a bargain at 13 times this year's earnings. By comparison, Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM) trade at 16 times and 14 times this year's earnings, respectively. Those two oil giants trade at higher multiples because they have less leverage, larger downstream businesses (less directly exposed to oil prices), and better scale and geographic diversification than Oxy, which is smaller and U.S.-centric.

Oxy is a more direct play on rising crude oil prices than Chevron, Exxon, and other big oil companies. However, its forward dividend yield of 1.9% is also significantly lower than Chevron's 3.8% and Exxon's 2.8% -- and it will sink a lot faster if oil prices pull back. Therefore, I'd personally stick with the bigger oil companies (or stable, income-generating midstream pipeline plays) rather than chase Oxy's year-long rally.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Chevron. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.