2 Stocks to Buy if You Think $100 Oil Will Last

Key Points

• Oxy’s upstream focus gives it more exposure to higher oil prices.
• Chevron’s diversification makes it a more balanced long-term play.
• 10 stocks we like better than Chevron ›

The prices of Brent and West Texas Intermediate (WTI) crude oil both recently surged above $100 per barrel as the Iran war dragged on. That was bad news for consumers and any industries that relied on stable gas prices, but it was great news for big oil companies.

If you expect oil to stay above $100 per barrel for the foreseeable future, it would be smart to invest in the companies that are converting that expensive oil into massive amounts of cash. These two oil stocks fit the bill: Occidental Petroleum (NYSE: OXY) and Chevron (NYSE: CVX).

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Occidental Petroleum

Occidental, more commonly known as Oxy, generates most of its revenue and profits from its upstream exploration, drilling, and extraction business. Upstream companies benefit from higher oil prices, which boost their revenues at a much faster rate than their operating expenses.

Oxy also owns a smaller midstream pipeline business that connects its upstream operations to downstream refineries and serves some third-party customers. It spun off its own downstream business, OxyChem, earlier this year. The lack of a downstream business -- which generally fares better when oil prices are lower -- makes Oxy a much more focused play on rising oil prices than its more diversified peers.

To support its capex and dividends, Oxy only needs WTI crude oil to remain above its $40-per-barrel corporate breakeven price. It also expects its free cash flow (FCF) to grow significantly as long as WTI remains above $60 per barrel.

For 2026, analysts expect its adjusted EPS to surge 175%. At $59, it still looks like a bargain at 16 times forward earnings, even though its stock has already risen about 43% this year. It pays a forward yield of 1.9%, and it's raised that payout annually for five consecutive years.

Chevron

Chevron, one of the world's largest integrated energy giants, owns upstream, midstream, and downstream businesses. It operates in 180 countries, but it gets most of its oil from the U.S., Kazakhstan, and Australia. It's less operationally exposed to the Middle East conflict than most of its competitors, and it's expanding into new oil-rich markets like Guyana.

Chevron's heavier exposure to the downstream market makes it a less direct play on higher oil prices than Oxy, but it's a more balanced long-term investment. Its scale and diversification have enabled it to raise its dividend annually for 39 consecutive years.

It currently pays a forward yield of 3.4% and needs Brent crude to remain above $50 per barrel to cover its capex and dividends through 2030. It plans to increase its oil and gas production by 2%-3% annually through the end of the decade.

For 2026, analysts expect Chevron's adjusted EPS to surge 122%. It's already rallied 38% this year, but it still looks like a safe value play at 16 times forward earnings.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.