Prediction: If Oil Holds Above $100, Occidental Petroleum Stock Could Return 20% By Year-End

Occidental Petroleum (NYSE: OXY), the lipid and state elephantine much commonly known arsenic Oxy, acceptable a 52-week precocious of $67.45 per stock connected March 31. That year-to-date summation of astir 60% was chiefly fueled by the Middle East conflict's interaction connected planetary lipid prices.

But aft hitting a four-year precocious of $112.25 per tube successful May, WTI crude lipid has dropped backmost to astir $92 per barrel. Oxy's banal present trades astatine astir $58. However, if lipid climbs supra $100 again and stays there, it could easy emergence astatine slightest 20% by the extremity of 2026.

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Why is Oxy's banal pegged to lipid prices?

Oxy is little diversified than vertically integrated vigor giants similar Chevron (NYSE: CVX), which owns a balanced premix of upstream, midstream, and downstream businesses. It generates astir of its gross from its upstream business, with a smaller stock from its midstream business. It divested its downstream business, OxyChem, astatine the opening of 2026.

Upstream exploration and extraction companies are mostly much delicate to lipid prices than midstream infrastructure operators and downstream refineries and petrochemical producers. When lipid prices are high, upstream companies tin turn their gross faster than their expenses. But erstwhile they driblet beneath breakeven levels, their expenses turn faster than their revenue.

To support its existent capex and dividends, Oxy needs lipid to stay supra its breakeven scope of $40- $45 per barrel. Its escaped currency travel (FCF) besides grows rapidly astatine supra $60 per barrel. WTI crude lipid hasn't traded beneath $45 per tube since the worst days of the pandemic successful 2020, truthful Oxy should stay safely supra its breakeven levels for the foreseeable future.

What would $100 per tube lipid mean for Oxy?

Last month, the terms of WTI crude dropped beneath $70 per tube arsenic the U.S. and Iran agreed to a ceasefire and bid talks. But since then, the struggle has resumed, and the Strait of Hormuz -- which handles astir a 4th of each maritime lipid commercialized -- remains closed.

As lipid prices emergence again, Oxy is integrating its assets from CrownRock (which it acquired successful 2024) to shorten drilling times, chopped structural costs, and boost escaped currency flow. It's besides expanding its STRATOS nonstop aerial seizure (DAC) works and commercializing its c dioxide removal services for ample companies.