Why Occidental Petroleum Plunged Today
Key Points
Occidental fell as oil prices tumbled to their lowest levels since early March.
President Trump said Iran and the U.S. were close to a deal to end the conflict.
Iran's Foreign Minister said the Straight of Hormuz would re-open.
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Shares of Occidental Petroleum (NYSE: OXY) fell on Thursday, down as much as 8.6% at one point this morning, before returning to a 5.8% decline as of 1:30 p.m. EDT.
Oil prices had declined about 10% at that time, to roughly $82 per barrel -- the lowest price since early March, just after the war started.
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Oil prices fell after President Trump said that Iran had agreed to the broad outlines of a deal that would reopen the Strait of Hormuz, unlocking the roughly 20% of global oil supply that Iran has restricted since shortly after the beginning of the war.
Trump announces a deal, and Iran reopens the Strait
This morning, President Trump told Bloomberg radio that a deal with Iran was largely complete and would be finalized over the weekend. In addition, Iranian Foreign Minister Abbas Araghchi announced on X that the Strait of Hormuz "is declared completely open for the remaining period of the ceasefire," subject to certain conditions. Axios also reported that the U.S. is considering un-freezing $20 billion in Iranian assets in exchange for Iran surrendering its stockpile of enriched uranium, while also suspending its nuclear program for a significant period of time.
While such a deal is by no means finalized and could collapse, Iran's announcement about the Strait caused oil prices to fall.
Occidental Petroleum is a U.S.-based upstream producer with the vast majority of its assets in the U.S. and North America. Occidental also sold off its midstream chemical division to Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) earlier this year, and it has a fair amount of debt on its balance sheet.
Being a pure-play upstream company with a fair amount of debt, Occidental is highly sensitive to oil and gas prices. That's why the stock is moving more than other oil majors today.
Image source: Getty Images.
Occidental could de-risk this year
Even an oil price above $80 would be significantly higher than the low-$60s prices at which oil began the year. Meanwhile the higher oil prices from the first half of 2026 should give Occidental a window of profitability to pay down a significant portion of its debt. That could help de-risk its story and lead to a higher multiple.
Overall, despite its decline today, Occidental remains a good option to hedge against geopolitical disruption and oil shocks stemming from the Middle East and/or Russia, while it also pays a 1.8% dividend.
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Billy Duberstein and/or his clients have positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
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