Right. So, oil. It’s gone a bit…vertical, hasn’t it? Since everything kicked off with Iran and Israel. Brent crude, the benchmark, was chugging along nicely under $80 a barrel, and now? Over $100. It feels… precarious. Like a very expensive Jenga tower. The issue, naturally, is getting the stuff out of the Persian Gulf. Tankers are understandably hesitant to sail through a potential conflict zone. Honestly, who can blame them? It’s not ideal for the commute.
This, as you might imagine, has given a bit of a boost to oil stocks. Occidental Petroleum (OXY 0.91%) is up over 9% since the…events began. Which, on the one hand, is good. On the other hand, it feels a bit…fraught. I mean, are we really expecting this to last? I’ve been trying to be sensible, you see. Sensible and diversified. It’s not going brilliantly.
The Price of Everything
Oil prices have been, shall we say, enthusiastic this year. Nearly 70% up since January. Occidental’s stock? Only about 40%. Which, if you’re a glass-half-empty type (and let’s be honest, that’s usually me), is a bit disappointing. The market seems to be thinking this won’t last. Which, logically, is probably right. The US is trying to keep the Strait of Hormuz open, and everyone’s releasing emergency oil stockpiles. It’s all very…organized. And the hope, apparently, is that Iran will come to the negotiating table. Oil futures reflect this. May 2026 contracts are above $100, but later this year? Mid-to-low $80s. It’s all a bit…complicated.
Units of Anxiety Consumed: 7. Hours Spent Refreshing Bloomberg: 6. If the conflict ends, or even just calms down, oil prices will likely fall. And Occidental’s stock with them. Which, naturally, would be annoying. But if Iran continues to disrupt things, crude prices could keep rising. And Occidental? Well, they could benefit. It’s a waiting game, really. And I’m terrible at waiting.
Surprisingly Resilient
Occidental wasn’t exactly expecting an oil price surge. They’re planning about $5.7 billion in capital projects this year, which is $550 million less than last year. Which is… sensible. They’re aiming for about 1% production growth, and expect over $1.2 billion in extra free cash flow. It’s all very…efficient. And they sold their chemicals subsidiary, OxyChem, which helped with the debt. Good work, Occidental. Good work.
Naturally, higher oil prices mean even more free cash flow. Which they can use to strengthen their balance sheet and buy back shares. It’s a virtuous cycle, apparently. I’m trying to be optimistic. It’s not easy.
A Tentative Recommendation
Occidental’s stock has rallied, but not as much as the oil price. Which means there’s potentially more upside. And even if the war ends and oil prices drop, Occidental can still do okay. Which is… reassuring. It’s not a perfect situation, nothing ever is, but it feels…solid. It’s a top-tier oil stock, in the current environment. I’m still slightly panicked, but… cautiously optimistic. Will become disciplined long-term investor: Progress: 3%. Must remember to breathe.
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2026-03-15 20:12