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). Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005.
But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue » 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.
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