This Buffett Oil Stock Is Quietly Outperforming Chevron Under Greg Abel. Is It Worth Buying Now?

Since Greg Abel took over as the new CEO of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) in January, much of the headlines have been about his changes to Berkshire Hathaway investments like Amazon, UnitedHealth, and Alphabet.

But an overlooked development with Warren Buffett's successor may be the strong performance of Occidental Petroleum (NYSE: OXY) shares. Occidental shares have surged by nearly 36% since January, outperforming major indexes like the S&P 500 (SNPINDEX: ^GSPC), which is up 14% year to date, as well as other major oil stocks, including Chevron (NYSE: CVX), another top Berkshire Hathaway holding, which is up by around 22.5%.

The question now, as shares have delivered more muted performance in recent months, is whether a further rally is just around the corner.

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Occidental and its standout performance

Occidental's surge took shape earlier this year, when the escalation of the U.S.-Iran conflict led to a sudden surge in crude oil prices. At that time, shares in Occidental, commonly called Oxy, soared from the mid-$40s to as much as $67.45 per share.

Occidental's latest results underscore why investors were so primed to bid it up. For the quarter ending June 30, 2026, Occidental reported year-over-year revenue growth of 57%, with earnings rising 20-fold from the prior year's quarter.

As an oil and gas exploration and production company, Occidental has greater operating leverage than integrated majors like Chevron. That's bad news during energy price downturns, but it can serve as a powerful catalyst during boom times.

But as oil prices have pulled back since Q2 2026, moving wildly as the situation in the Mideast changes by the day, it's understandable if you think Occidental's hot run was a one-and-done event.

Oxy could still rally, but it's a largely binary bet

Following Occidental's sale of OxyChem to Berkshire for $9.7 billion, the company has reduced its outstanding debt by another $6.5 billion and, at the same time, become a pure play on fossil fuel prices. Will crude prices surge again? Despite a reescalation of Mideast tensions, oil has yet to hit triple-digit prices. A big reason for this is China.

In 2025, when prices were substantially lower, China stockpiled crude oil. This has enabled it to ride out the supply shocks simply by importing less oil. At some point, however, this stockpile will run dry. When, not if, China replenishes, prices could surge once again.

If this happens while the Strait of Hormuz crisis lingers, crude prices could spike again. In turn, Occidental's earnings could bounce back in a big way, well above 2027 estimates of $3.93 per share.

That said, while there's a long-term bull case for Oxy, many investors may prefer the less chancy setup with Chevron, also considered one of the blue chip dividend stocks. Chevron's bull case, built mostly on the successful execution of its five-year plan, already factors in Brent crude prices lower than present levels. For now, Abel appears content to hold both, but only time will tell how long that lasts.

Thomas Niel has positions in UnitedHealth Group. The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, and Chevron. The Motley Fool recommends Occidental Petroleum and UnitedHealth Group. The Motley Fool has a disclosure policy.