One does rather admire Mr. Buffett’s persistence. Piling into Occidental Petroleum, you know. A most sensible chap, really. It now constitutes a perfectly respectable 4% of Berkshire Hathaway’s portfolio – a sum that, I daresay, keeps the accountants occupied. And with oil prices behaving as they currently are – a touch dramatic, wouldn’t you agree? – this particular stock appears, shall we say, less of a gamble than most. A classic, really. Though one hesitates to use such a pedestrian term.
Occidental Petroleum: A Domestic Affair
Occidental Petroleum (OXY +5.22%) is clearly a favorite of Mr. Buffett at the moment. He left a rather substantial $10.9 billion position in the company before retiring from Berkshire Hathaway – a bet that has, thankfully, proven rather astute. One wouldn’t want to be on the wrong side of that particular transaction, would one?
When Mr. Buffett first deigned to invest in OXY back in 2019, oil was a mere $50 to $60 a barrel. At the start of this year, it hadn’t improved much, frankly. A bit dreary, if you ask me.
However, these recent geopolitical shenanigans – tiresome, really – have sent oil prices soaring once more. A brief flirtation with $115, settling at a still-robust $80. Some analysts predict another surge to $100. A boon for upstream oil companies, naturally. Though one suspects the analysts are simply stating the obvious.
A rather predictable domino effect is unfolding, fuelled by oil production disruptions across the Middle East. China, in a fit of pique, has banned refined fuel exports. And the Strait of Hormuz – that vital artery of global oil transportation – is, shall we say, experiencing a touch of turbulence. Honestly, the world is dreadfully dramatic.
While oil prices have been performing a rather exuberant jig, many oil producers’ stock prices haven’t quite kept pace. Chevron, for example, is up a mere 6% in the last month, while oil itself has risen 24%. Occidental Petroleum, however, is up a respectable 18% – three times Chevron’s performance. A rather telling disparity, wouldn’t you agree?
Much of this, one suspects, is due to Chevron’s diversified, integrated business model. Perfectly sensible, of course. But Occidental’s upstream focus is simply more leveraged to rising oil prices. And, crucially, their geographic exposure is rather more… advantageous. Over 80% of Occidental’s oil and gas production is domestic, safely tucked away in the United States. Chevron, on the other hand, produces roughly 50% domestically, with a significant portion exposed to the… shall we say, ‘unstable’ regions of Venezuela and the Middle East. A rather risky proposition, if you ask me.
Mr. Buffett’s investment in Occidental Petroleum likely wasn’t solely based on domestic exposure, naturally. But in times of geopolitical upheaval, the company undeniably faces less uncertainty than its rivals. This should translate to positive volume growth and steady demand, resulting in a rather profitable situation for investors. A win-win, as they say. Though one prefers a more elegant phrasing, naturally.
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2026-03-12 23:02