When the whole world starts to doubt the greatest investor, Warren Buffet, after he started buying Occidental Petroleum (OXY) shares in the last few years, he again proved the naysayers wrong this time round.
Occidental Petroleum (OXY) remains a standout performer in Berkshire Hathaway’s portfolio, climbing over 43% year-to-date. This surge is largely driven by a spike in global oil prices and supply chain disruptions following the closure of the Strait of Hormuz, which have significantly bolstered the company’s profit margins.
In contrast, the broader market has struggled; the S&P 500 has retreated roughly 5% in 2026 as geopolitical friction between the US-Israel alliance and Iran continues to weigh on investor sentiment.
According to the latest Q4 13F filings, OXY has solidified its position as Warren Buffett’s seventh-largest holding. Berkshire currently owns 264,941,431 shares, valued at approximately $10.89 billion, accounting for 3.97% of its total $274 billion equity portfolio.
Background: The Buffett-OXY Timeline
Warren Buffett’s history with Occidental is a masterclass in opportunistic investing, moving from a lender to a dominant shareholder over several years:
The 2019 Entry: Buffett first stepped in with a $10 billion investment to help Occidental outbid Chevron for the acquisition of Anadarko Petroleum. In exchange, Berkshire received preferred stock (yielding an 8% dividend) and warrants to buy common stock.
The “Slow Accumulation”: Since 2022, Berkshire has consistently increased its stake whenever the price dipped into the low $50s or high $60s. In August 2022, Berkshire received regulatory approval to purchase up to 50% of the company, though Buffett has clarified he does not intend to take full control of Occidental.
The 2022 Aggressive Buy: After a lull during the pandemic, Berkshire began aggressively purchasing common shares in March 2022. Buffett famously stated he started buying after reading an analyst transcript and deciding “it made sense.”
February 2024: Berkshire bought 4.3 million shares at an average price of around $57.
June 2024: A significant 9-day buying streak where Buffett added roughly 7.3 million shares.
December 2024: Added another 8 million shares as the stock hit a multi-year low.
February 2025: Most recently, Berkshire added approximately 763,000 shares at an average price of $46.79, signaling a willingness to lower his average cost basis even further during market volatility.
As of January 2, 2026, the relationship evolved from equity ownership to a direct operational partnership. Berkshire completed a $9.7 billion cash acquisition of OxyChem, Occidental’s chemical division. This allowed Occidental to slash its debt by over $5.8 billion, strengthening the balance sheet of the very company Buffett heavily owns.
Should You Chase OXY Or Other Oil Stocks Now?
The decision to buy into Occidental Petroleum (OXY) or other oil stocks right now depends heavily on your outlook for the current Middle East crisis and your tolerance for volatility. With oil prices surging toward multi-year highs in March 2026, the sector is in a “high-reward, high-risk” phase.
Pros: The Bull Case
- Geopolitical Tailwinds: The closure of the Strait of Hormuz has removed nearly 20% of global supply from the market. This creates a “structural supply crunch” that typically benefits upstream producers like OXY more than diversified majors.
- Operating Leverage: OXY is a “pure-play” on oil prices. Unlike Chevron or Exxon, which have massive refining and chemical businesses that can suffer when input costs (crude oil) rise too fast, OXY’s earnings are more directly tied to the price of a barrel of oil.
- Buffett’s “Floor”: Berkshire Hathaway continues to hold a massive stake (~29%) and has historically bought more when the stock dips. This provides a psychological “price floor” that many other oil stocks lack.
- Improved Balance Sheet: OXY recently completed a $1.2 billion debt tender offer and sold its OxyChem unit for $9.7 billion. This has significantly lowered its interest payments and improved its financial “breakeven” point.
Cons: The Bear Case
- Valuation Stretch: OXY has already surged 43% year-to-date. At a P/E ratio over 40x, it is currently trading at a significant premium compared to the industry average of ~16x. Much of the “good news” may already be priced in.
- Lack of Diversification: By selling OxyChem, OXY has become less diversified. If geopolitical tensions ease and oil prices crash back toward $70, OXY will likely fall much harder and faster than more “integrated” stocks like Chevron (CVX) or ExxonMobil (XOM).
- Lower Dividends: OXY’s dividend yield (~1.8%) is significantly lower than peers like Chevron (~3.5%) or Exxon (~3.2%). If you are looking for steady income, OXY is less attractive.
Key Risks to Watch
- Demand Destruction: If oil stays above $110/bbl for too long, global economic growth could stall (stagflation), eventually causing oil demand—and prices—to collapse.
- Peace Risk: Any sudden diplomatic breakthrough in the Iran-US-Israel conflict would likely trigger a massive “sell-off” in energy stocks as the “war premium” evaporates from oil prices.
- Warrant Dilution: Berkshire Hathaway holds warrants to buy 83.9 million shares at $59.62. As the stock stays above this level, the potential for share dilution becomes a headwind for the stock price.
Comparison Table: March 2026
| Stock | Best For… | Key Advantage | Risk Level |
| OXY | High Growth / Momentum | Buffett’s backing; high leverage to oil prices. | High |
| Chevron (CVX) | Income / Stability | 39 years of dividend growth; very diversified. | Low/Med |
| ConocoPhillips (COP) | Cash Flow Play | Extremely low production costs (breakeven in $30s). | Medium |
| PBF Energy (PBF) | Short-term Trade | Benefits from high refining margins (crack spreads). | Very High |
Concluding Thoughts
Stock market investment is always ruled by two powerful emotions: fear and greed, and they both can destroy portfolios, i.e. selling out of fear or buying into greed. The Iran war is a highly uncertain event that may dragged for years or end abruptly, if US decides to pull out, especially when mid-term elections are nearing. I think if you really need to buy into oil counters, it is better to buy those with lower risks such as Exon Mobil or Chevron. However, do bear in mind that when you buy at near All-Time-High (ATH) prices, the profit margin is lower as compared to buying when the stock pulls back. So, do your own due diligence and be responsible for your own trades.
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