The tale has a longer history than most people realize. In 1920, Occidental was established in Los Angeles, but it was under Armand Hammer—a man more reminiscent of a Cold War figure than an oil executive—that the company most of us are familiar with took shape. He negotiated with Libya, made agreements with the Soviet Union, and managed to keep the company operating during decades of geopolitical unrest. Oxy’s operations are still reminiscent of that era; they are audacious, occasionally careless, and constantly eager to make big bets.

In recent memory, the $55 billion Anadarko acquisition in 2019 was the biggest of those bets. As it happened, the timing was disastrous. Within months of the pandemic, debt skyrocketed, oil prices plummeted, and Oxy’s stock dropped to levels not seen in more than 20 years. Looking back, it seems like the company was just one poor quarter away from a much worse situation. A significant oil producer rarely looks into such a chasm and turns to leave.

Warren Buffett followed. The relationship between Berkshire Hathaway and Occidental began in 2019 with warrants and preferred stock, but the actual purchases didn’t start until 2022. Through 2023, 2024, and 2025, Buffett continued to add shares. Occidental currently makes up about 5% of Berkshire’s equity portfolio, making it one of the company’s top holdings.

Buffett might have noticed something that the rest of the market overlooked: a company that had been driven down to an absurd price while holding assets that the world would eventually require once more.

Oxy did not create the current rally, but it undoubtedly benefits from it. Due to supply concerns in the Strait of Hormuz and tensions between the United States and Iran, West Texas Intermediate crude recently surged to about $90 per barrel, with Brent close to $99. That kind of pricing environment completely alters a business that is so heavily dependent on upstream activities, such as exploration, drilling, and extraction. The same business model that lost money in 2024 and 2025 due to a 20% decline in WTI is now producing impressive free cash flow.

That was evident from Occidental’s fourth-quarter results. Global production exceeded management’s own guidance midpoint, averaging 1,481 thousand barrels of oil equivalent per day. The company achieved a new annual production record of 1.434 million barrels of oil equivalent per day for the entire year. One could argue that the company is operating at a level never seen before, so it’s not just a recovery.

The more difficult question remains, though. Is the easy money gone now that the stock has already moved so sharply? Investors appear to think that Oxy’s leaner balance sheet makes it more resilient than it was three years ago and that the geopolitical premium on oil won’t disappear overnight. However, when expectations surpass fundamentals, valuations tighten rapidly, and oil has a history of humiliating those who believe the cycle is over.

It’s difficult to ignore how frequently this business is counted out and how frequently it returns. The question that no one can truly answer at this time is whether that pattern holds true once more.

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