Oil Price Surge Boosts Two Big Oil Stocks

The recent surge in oil prices above $100 per barrel has significant implications for investors. Two stocks, Occidental Petroleum (OXY) and Chevron (CVX), are particularly well-positioned to benefit from higher oil prices.

Occidental's upstream focus gives it more exposure to rising oil prices, as its revenues grow faster than its operating expenses. The company only needs WTI crude oil to remain above $40 per barrel to support its capex and dividends. Analysts expect Occidental's adjusted EPS to surge 175% in 2026, with a forward P/E ratio of 16 times.

Chevron, on the other hand, is a more diversified play on higher oil prices. Although it has a heavier exposure to downstream markets, its scale and diversification have enabled it to raise its dividend annually for 39 consecutive years. Chevron needs Brent crude to remain above $50 per barrel to cover its capex and dividends through 2030.

Despite their potential benefits from higher oil prices, investors should be aware of the risks associated with investing in big oil companies. The Iran conflict has led to increased tensions in the Middle East, which could impact global oil supplies and prices.