Right. Occidental Petroleum. OXY. Shares popped 5.1% today. Honestly, it’s a bit… predictable. You see, Warren Buffett likes it. Really likes it. It’s his seventh-largest holding, which, let’s be real, is a bit like a celebrity endorsement, only with billions of dollars attached. And I’m here, trying to figure out if I should be jealous or just… pragmatic.
Because here’s the thing. It’s not just about Buffett’s fondness for oil. It’s about leverage. Pure, unadulterated leverage. If things go south – and when don’t they? – in places like, oh, I don’t know, the Strait of Hormuz, Occidental’s position in the Permian Basin suddenly looks a lot more attractive. It’s like having a really good escape plan. Which, frankly, everyone needs. Especially me, if I’m being honest.
Oil Prices & Geopolitical Games
So, the Strait of Hormuz. About 20% of the world’s oil flows through that little bottleneck. And Iran? Well, Iran’s new Ayatollah, Mojtaba Khamenei, is having a moment. Declaring the Strait should remain closed. Commercial ships are getting hit with projectiles. It’s all very… dramatic. And predictably, it’s pushing up oil prices. The IEA and the U.S. are releasing reserves, but it’s a Band-Aid on a rather large, potentially gaping, wound.
And Trump? Oh, Trump. He’s more concerned about Iran not having nuclear weapons than about oil prices. Which is… a choice. He also pointed out the U.S. is the biggest oil producer. Which is less a statement of geopolitical strategy and more of a gleeful admission of profit potential. It’s the kind of bluntness I can almost… respect. Almost.
Occidental, of course, benefits from all this. They’re a major player in the Permian Basin, which is good. They have some exposure to the Middle East, but thankfully, less than 20% of their production is tied to that particular powder keg. A lot of it’s in Algeria, which, bless its heart, doesn’t need the Strait of Hormuz to get its oil where it needs to go. It’s about minimizing risk, you see. Something I’m increasingly focused on. Don’t judge.
Following Buffett’s Lead?
Here’s the slightly embarrassing part. Even with the recent surge, Occidental’s stock is still trading at $58.41. Buffett’s average cost? Around $54.20. Which means he’s not exactly swimming in profits yet. But he’s patient. And he sees something I’m starting to see too.
Operational excellence, low per-barrel costs, a deep inventory… it all adds up. Last year, they generated $4.3 billion in free cash flow. That puts them at a 13.5 times free cash flow multiple. Which, let’s be honest, is pretty attractive. Especially when you consider those cash flows were generated when oil prices were significantly lower. It’s not a guaranteed win, obviously. Nothing ever is. But it’s a compelling argument for playing the “higher-for-longer” oil price scenario.
So, should you follow Buffett into Occidental? I’m not giving financial advice, obviously. I’m just a… observer. A slightly cynical, anxious observer. But I’m definitely adding it to my watch list. Because in a world that feels increasingly unstable, a little bit of leverage in a solid asset… well, that’s something I can get behind. Even if it means admitting Buffett might actually be onto something. Ugh.
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2026-03-12 23:53