Barclays resets Occidental Petroleum stock price as crude jumps

By Peace Longe TheStreet

Updated May 26, 2026 10:01 AM

Wall Street spent most of 2025 sour on Occidental Petroleum (OXY), but that's changing.

Today, May 26, Barclays became the third major bank in six trading days to flip its stance on Warren Buffett's largest single oil holding. The firm lifted OXY to Overweight from Equalweight and raised its price target to $72 from $59, Investing.com reports.

The timing is no accident. Brent crude is hovering near $97 a barrel after the latest escalation in the Iran conflict, and analysts who had been writing off OXY's balance sheet are suddenly writing about its cash flow.

For everyday investors, the bigger question is whether the rally has room to run or if the easy money has already been made.

Occidental Petroleum's free cash flow surged 52% year-over-year in the first quarter of 2026, drawing fresh Wall Street upgrades.

George Pachantouris / Getty Images

Barclays sees Occidental's debt story finally paying off

Barclays didn't upgrade OXY because oil is up. It was upgraded because Occidental is finally cleaning up the debt on its balance sheet that has weighed on the stock since the Anadarko deal.

Principal debt has fallen from roughly $20.8 billion at the end of the third quarter of 2025 to $13.3 billion today, after Occidental repaid $7.1 billion through May 5, according to the company's Q1 earnings release filed with the SEC. The interest savings alone are running about $550 million below 2025 levels.

That progress is what Barclays is pricing in. The firm expects OXY to hit its $10 billion debt milestone and prefund the Berkshire preferred shares by the second half of 2027.

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Here's the translation for retail investors: less debt means fewer dollars going to bondholders, and more flowing to dividend growth and share buybacks. That is the shareholder return shift Barclays is betting on.

The cash flow number that flipped the analyst consensus

The first quarter of 2026 gave OXY its strongest single-quarter case in years.

Free cash flow before working capital hit roughly $1.7 billion, a 52% jump year-over-year, even with oil prices roughly flat versus the year-ago period, per the Q1 earnings transcript on Investing.com.

Adjusted earnings came in at $1.06 per share against a $0.59 estimate, an 80% beat.

Production also exceeded guidance at 1.43 million barrels of oil equivalent per day.

This is the operating profile that analysts now have to model. Barclays projects cumulative free cash flow exceeding 55% of enterprise value over the next five years at its updated price deck.

Why three Wall Street banks reversed course in six days

Barclays isn't acting alone. The string of upgrades tells the real story.

May 21: Goldman Sachs analyst Neil Mehta upgraded OXY to Neutral from Sell and raised the price target to $64 from $57, per MarketScreener.
May 22: Morgan Stanley nudged its price target up to $74 from $73, TipRanks data on CNN shows.
May 26: Barclays goes Overweight with a $72 target.

Three different shops, three different valuations, one shared thesis: debt is down, liquidity is improving, and oil prices are high.

The Buffett floor under the stock

Berkshire Hathaway (BRK.A) (BRK.B) owns roughly 264.94 million shares of OXY as of March 31, equal to about 26.64% of the company, GuruFocus filings data shows. The conglomerate also holds $8.5 billion in preferred stock plus warrants.

That stake matters for two reasons.

First, Buffett's average cost sits in the low $50s, which gives the market a psychological floor.
Second, Berkshire has regulatory clearance to buy up to 50% of OXY's common stock, a ceiling that has previouslytriggered rallies on disclosure of fresh purchases.

Plus, Berkshire bought OxyChem outright for $9.7 billion in cash in January, per a press release on sec.gov, the proceeds of which funded a chunk of OXY's debt paydown.

Is the energy bull case shifting from rate cuts to geopolitical premium?

For most of 2025, the energy bull case rested on a soft-landing thesis: Fed cuts would weaken the dollar, lift commodities, and pull oil higher.

The 2026 setup looks different.

Brent is trading near $97 not because of central banks but because the Strait of Hormuz crisis has disrupted roughly 20% of global oil and LNG supply at various points this year. UBS has flagged a $150 worst-case scenario, TipRanks notes.

That premium is real, but it's also the risk. If the U.S.-Iran ceasefire framework holds and the Strait fully reopens, crude could give back a meaningful slice of its gains, and so could OXY.

What still needs to happen for the bull case to hold

Before retail investors chase the upgrade, several things still need to break OXY's way:

Oil stays elevated. Barclays' $72 target assumes a constructive crude deck. A sustained pullback below $80 Brent compresses the math.
OXY hits the $10 billion debt milestone by late 2027 as guided, freeing capacity for buybacks and dividend growth.
No surprise Berkshire trim. Buffett's stake is a floor, but any disclosed selling would dent sentiment fast.
Strait of Hormuz remains a recurring concern, keeping the geopolitical premium in the price.

The bottom line for investors

OXY at current levels is a hybrid bet: part oil price, part balance-sheet repair, part Buffett shadow.

Barclays' upgrade confirms that the second leg, balance-sheet repair, is no longer speculative. The first quarter results gave analysts a number they can model around, and the upgrade cycle has begun.

The risk is that the geopolitical premium fades faster than the cash flow story strengthens.

Investors comfortable with that trade-off have a cleaner setup than they've had since 2023.

Those waiting for a pullback may want to watch the $58 to $60 range, where Buffett's average cost sits as a structural support level.

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This story was originally published May 26, 2026 at 9:37 AM.