2 Oil Stocks That Wall Street Loves as Crude Prices Surge

<p>As the war in Iran enters its third week, the world remains on tenterhooks. While concerns persist about the war intensifying and the participating countries deepening their involvement, the primary economic worries are around the surging oil prices. Notably, the prices of April WTI Crude Oil (CLJ26) have witnessed a sharp jump of 48.2% since Feb. 28, the day when the first munitions from the U.S.-Israel combined force were dropped on Iran. Consequently, while Tehran and the wider Middle East remain on the boil, the American public is paying more for gasoline at gas stations, as the damages from “Operation Epic Fury” are not just beyond its shores.</p>
<p>While gasoline prices reached their highest levels since 2022, fertilizer costs such as urea are up by 35%, with the war-torn Gulf region producing nearly 50% of global urea exports. This is being slowly but surely reflected in the prices of everyday essentials such as eggs (up 14% since Feb. 28), bread (up 5% since Feb. 28), and milk (up 3% since Feb. 28), among others.</p>
<p>So, as investment strategies go haywire amid this dire situation, which stocks can protect our portfolios? Well, unsurprisingly, it should be oil stocks. But which ones? Piper Sandler believes that bets should be hedged on these two names.</p>
<p>Oil Stock #1: Occidental Petroleum (OXY)</p>
<p>Piper Sandler's first pick was also one of the last conviction trades of the Oracle of Omaha, Warren Buffett, before he hung up his boots as the CEO of Berkshire Hathaway. Founded in 1920, Occidental Petroleum (OXY) is a major integrated oil and gas company involved in three core business segments, namely, oil and gas, chemicals, and carbon management.</p>
<p>Valued at a market cap of $57.1 billion, OXY stock is up a substantial 39% on a year-to-date (YTD) basis. The stock also offers a dividend yield of 1.80%.</p>
<p>Coming to its most recent results for Q4 2025, Occidental had a mixed showing, although both net sales and earnings declined from the previous year. Net sales of $5.4 billion were down 5.2% on a year-over-year (YoY) basis. A 14.5% yearly fall in oil and gas net sales to $4.8 billion was the culprit, as daily production remained almost flat at 1,246 thousand barrels of oil equivalent per day (MBOE/D) compared to 1,233 MBOE/D in the prior year.</p>
<p>Cash flow from operations declined as well to $2.7 billion from $3.1 billion in the year-ago period, with the company ending 2025 with a cash balance of about $2 billion. This was higher than its short-term debt levels of $1.8 billion.</p>
<p>Notwithstanding all this, Piper Sandler increased the price target on the company's stock to $66 from $54 earlier. Citing its strong operational presence in the rich Delaware Basin, the broking firm expects the company to maintain its efficiency gains and sustain its levels of production.</p>
<p>Overall, the Wall Street community has deemed the OXY stock to be a consensus “Hold,” with a mean target price that has already been surpassed. The high target price of $69 denotes an upside potential of about 19% from current levels. Out of 27 analysts covering the stock, six have a “Strong Buy” rating, one has a “Moderate Buy” rating, 17 have a “Hold,” and three have a “Strong Sell” rating.</p>
<p>Oil Stock #2: Murphy Oil (MUR)</p>
<p>Another favorite oil stock of Piper Sandler is Houston, TX-based Murphy Oil (MUR). Founded in 1950, Murphy Oil is an independent exploration and production (E&amp;P) company. Its core activities include exploration of oil and natural gas, drilling and production, and development of offshore and shale fields.</p>
<p>Its market cap at $5.3 billion is much lower than that of Occidental; however, its dividend yield of 3.80% is more than double. The stock is up 16% on a YTD basis.</p>
<p>Notably, Murphy's results for the most recent quarter were also mixed, with revenues missing but earnings surpassing estimates. Total revenues fell to $613.1 million from $699.6 million in the year-ago period. However, total net crude oil and natural gas production witnessed a rise when compared to the previous year. While total net crude oil and condensate production for the three months ended Dec. 31, 2025, was at 92,702 barrels per day (vs. 91,460 barrels per day in Q4 2024), total net natural gas production in the same period stood at 503,112 cubic feet per day, which implies an annual growth rate of 4.6%.</p>
<p>Yet, earnings saw a sharp drop of 60% on a YoY basis to $0.14 per share as it managed to outperform the Street expectations of a loss of $0.04 per share.</p>
<p>Net cash from operations fell by 42.4% from the prior year to $249.6 million as the company closed the quarter with a cash balance of $377.2 million. This was higher than the company's short-term debt levels of $281.3 million.</p>
<p>Meanwhile, Piper Sandler upped its price target on the stock to $41 from $33. The firm believes that value will accrue to the firm through significant operating leverage and appraisal work at the Hai Su Vang project in Vietnam during the first half of 2026, which could aid its reserves.</p>
<p>Thus, analysts have attributed a consensus rating of “Hold” for MUR stock. While the mean target price has already been surpassed, the high target price of $41 denotes an upside potential of about 11% from current levels. Out of 18 analysts covering the stock, two have a “Strong Buy” rating, 15 have a “Hold” rating, and one has a “Strong Sell” rating.</p>
<p>Final Take</p>
<p>As assumptions are there for oil to cross $150 per barrel, the scenario for oil stocks seems to be one of more price appreciation. Both Murphy Oil and Occidental are dividend-paying companies with a balance sheet that has reasonable levels of liquidity and strong operational prowess in some of the richest oil-producing regions of the world. As such, Piper Sandler's assertions should not be scoffed at.</p>
<p>Even those who do not believe in the long-term oil and gas story and believe renewable energy is the way forward for our energy needs, a short-term tactical trade would do no harm in these names.</p>
<p>On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com</p>