Why Occidental Petroleum Rallied in March

Key Points
Occidental rallied along with oil prices last month.
The company is benefiting from its deep, low-cost inventory in the Permian Basin.
With the benefit of higher profits, Occidental could pay down a large portion of its debt this year.
- 10 stocks we like better than Occidental Petroleum ›
Shares of Occidental Petroleum (NYSE: OXY) rallied 22.5% in March, according to data from S&P Global Market Intelligence.
Occidental was an obvious beneficiary of higher oil prices, which spiked in March after the war with Iran broke out on the last day of February. As a U.S.-centered oil-and-gas giant, Occidental stands to benefit from those higher prices and unaffected supply. Although Occidental has some assets in the Middle East, they account for only a small share of its overall production.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Occidental's strategic positioning led to analyst upgrades
Although oil prices had already been rising in the lead-up to the war, Iran's subsequent closing of the Strait of Hormuz added fuel to the fire, so to speak. In March, the price of oil rallied by just over 50% to $111 per barrel, leading to outsize profits for oil and gas drillers that are still able to get their barrels to market.
Occidental is one of the largest acreage holders in the U.S., with only about 14% of its total barrels coming from the affected area of the Middle East.
Occidental's prime asset is its deep, low-cost inventory in the Permian Basin in Texas, where the company has been a leader in terms of lowering its cost-per-barrel in this low-cost region. That distinction led sell-side analysts at both Wells Fargo and Piper Sandler to upgrade Occidental shares during March. Both analysts noted that Occidental had lowered its 2026 capital spending in the Permian Basin from $3.9 billion to $3.1 billion, while still maintaining the same output. This ruthless focus on efficiency is driving optimism about higher capital returns and debt paydowns amid the past month's rise in oil prices.
Occidental is very sensitive to oil prices
Occidental had taken on significant debt to acquire Anadarko Petroleum in 2019 and CrownRock in 2024. But between the sale of its chemicals business in January and the war-driven surge in oil and gas prices, Occidental should be able to use this time to pay down a large chunk of the $20.4 billion in debt it began the year with.
In fact, if oil stays above $100 for an extended period of time, it's possible that Occidental could pay off a very large portion of that debt. The company generated $4.3 billion in free cash flow last year at an average oil price in the high $60s, and management had already guided to $1.2 billion in free cash flow improvement from operating efficiencies alone. An oil price above $100 could enable double-digit billions in free cash flow, if prices stay there for an extended period.
The big question is, of course, how long oil and gas prices will stay elevated. If high prices persist, Occidental's current share price still looks too low.
Should you buy stock in Occidental Petroleum right now?
Before you buy stock in Occidental Petroleum, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Occidental Petroleum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $533,522!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,089,028!*
Now, it’s worth noting Stock Advisor’s total average return is 930% — a market-crushing outperformance compared to 185% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of April 7, 2026.
Wells Fargo is an advertising partner of Motley Fool Money. Billy Duberstein and/or his clients have position in any of the stocks mentioned. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.