Occidental Petroleum: Buy, Sell, or Hold?

There's no doubt 2024 and 2025 were brutally difficult years for Occidental Petroleum (NYSE: OXY). During those two years, the stock fell 31%. The tides have turned, however, and Occidental's stock has rebounded by more than 45% since the start of this year.

The question for investors now is whether this rally will last or if the rebound is just the result of short-term tailwinds for the oil and gas industry. Should you buy, sell, or hold Occidental? Let's have a look at what's going on with the Houston, Texas-based company.

Buffett helped the balance sheet

There's a lot that has gone right for Occidental in the first four months of this year. In January 2026, the company sold its chemical unit, OxyChem, to former CEO Warren Buffett's Berkshire Hathaway for $9.7 billion. More than half of the sales proceeds went to pay down debt. Management also indicated that a share buyback program would be implemented with the money.

Occidental has also pushed a multi-year effort to become more efficient. This has led to substantial free cash flow. After the sale of OxyChem, Occidental revealed its capex spending would be 10% lower in 2026 than the year before. The estimates for full-year 2026 free cash flow are nearly $7 billion.

Image source: Getty Images.

Lastly, West Texas Intermediate (WTI) crude oil prices have also skyrocketed this year. As of this writing, WTI crude oil prices are hovering slightly above $100 per barrel. At this level, Occidental is well above its break-even point, which is approximately $51 per barrel now.

The risks with Occidental, of course, are tied to oil price sensitivity. Unfortunately, Occidental is less diversified than some of its competitors. There's also the upcoming retirement of longtime CEO Vicki Hollub. Current COO Richard Jackson will take the reins, but new leadership also poses a risk.

Should you buy shares of Occidental Petroleum now?

As of this writing, Occidental's forward P/E ratio is slightly above 13, and its price/earnings-to-growth ratio is 1.29. Both valuation metrics indicate that the stock is fairly priced. Occidental is currently trading around $60 per share. The oil and gas company hit a 52-week high of $67 at the end of March.

Since the company is focusing on strengthening its balance sheet, and as long as oil prices remain elevated, Occidental looks like a decent buy. However, competitors such as ExxonMobil and Chevron are better positioned should oil prices retreat in the coming year. With Occidental reporting its earnings this week, I'd wait to see how this quarter shapes up before making any moves.

Catie Hogan 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.