In a dramatic show of market strength, shares of Occidental Petroleum (NYSE: OXY) surged 9.4% today, February 19, 2026, following a fourth-quarter earnings report that handily outpaced Wall Street expectations. The Houston-based energy giant reported adjusted earnings of $0.31 per share, nearly double the consensus analyst estimate of $0.18, signaling a profound operational turnaround. The stock’s rally, which added approximately $4 billion to the company’s market valuation in a single session, was further amplified by a sharp spike in global crude prices as geopolitical tensions in the Middle East reached a fever pitch.

The surge marks a pivotal moment for Occidental, which has spent the last several years aggressively deleveraging its balance sheet following high-profile acquisitions. With West Texas Intermediate (WTI) crude climbing toward $67 per barrel and Brent crude breaching the $71 mark today, investors are pivotally reappraising Occidental’s position as a top-tier cash-flow generator. The combination of disciplined capital spending and a macro-environment favorable to upstream producers has placed the company at the forefront of the energy sector's 2026 performance leaders.

Operational Excellence and the "Buffett Effect" Drive Record Results

The blowout earnings report, released after the closing bell on February 18, 2026, detailed a quarter defined by record-breaking efficiency in the Permian Basin and the Rockies. Occidental reported total global production of 1,481 thousand barrels of oil equivalent per day (Mboed), consistently hitting the high end of its guidance. This operational beat was not merely a matter of volume; the company’s ability to maintain low lifting costs while expanding its footprint in domestic shale plays proved to be the decisive factor in its earnings surprise.

A significant contributor to the current market euphoria is the recently completed "balance sheet cleanup" led by CEO Vicki Hollub. On January 2, 2026, Occidental finalized the sale of its OxyChem chemical division to Berkshire Hathaway (NYSE: BRK.B) for a staggering $9.7 billion in cash. This strategic divestiture allowed the company to slash its principal debt to just $15.0 billion by early 2026, a milestone that many analysts thought would take another two years to achieve. The sale effectively transformed Occidental from a debt-burdened operator into a lean, upstream-focused powerhouse.

The market reaction on February 19 was also heavily influenced by the "Buffett Effect." With Berkshire Hathaway now owning nearly 29% of Occidental's common stock, the investment conglomerate’s decision to buy the OxyChem division outright was viewed by the market as the ultimate seal of approval. Institutional investors, who had previously been wary of Occidental’s leverage, are now flocking back to the name, viewing the Berkshire partnership as a safety net that underscores the long-term value of Occidental’s underlying assets.

Winners and Losers in the Wake of the OXY Rally

Occidental Petroleum (NYSE: OXY) is the undisputed winner of the week, with its 9.4% jump outperforming the broader S&P 500 Energy Index by a wide margin. However, the ripple effects are being felt across the industry. Berkshire Hathaway (NYSE: BRK.B) also stands to benefit significantly, not only through its massive equity stake but also through its new ownership of OxyChem, which remains a high-margin, market-leading chemical business. The deal has proven to be a masterclass in strategic alignment, providing OXY with liquidity while giving Berkshire a steady, cash-generating industrial asset.

Other major upstream players like ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) saw their shares rise by 2.5% and 3.1%, respectively, as the "OXY effect" lifted the entire sector. These companies are benefiting from the same crude oil tailwinds that are fueling Occidental’s growth. Investors are increasingly favoring companies with high exposure to the Permian Basin, where Occidental's results have set a new benchmark for profitability. The success of OXY’s cost-containment strategies is likely to put pressure on peers to prove they can achieve similar margins in a volatile pricing environment.

Conversely, the losers in this scenario are the energy-intensive sectors currently grappling with the sudden spike in fuel costs. Airline stocks, including Delta Air Lines (NYSE: DAL) and United Airlines (NYSE: UAL), traded lower today as Brent crude’s climb toward $71 per barrel threatens to erode their thin margins. Additionally, smaller independent shale producers that lack Occidental’s scale and the backing of a major partner like Berkshire may find it difficult to compete for services and labor in the Permian, as larger players ramp up activity to capitalize on higher prices.

A New Era of Capital Discipline and Geopolitical Risk

Occidental’s performance reflects a broader industry trend toward "value over volume." For years, the U.S. shale industry was criticized for prioritizing production growth at the expense of shareholder returns. However, Occidental’s 2026 strategy—highlighted by a modest capital spending budget of $5.5 billion to $5.9 billion—shows a commitment to returning excess cash to investors rather than chasing marginal barrels. This shift has fundamentally changed the investment thesis for the energy sector, making it a viable haven for income-seeking investors.

The geopolitical backdrop cannot be ignored. The 4% jump in oil prices over the last 48 hours is directly tied to the collapse of nuclear negotiations in Geneva and escalating naval posturing between the United States and Iran in the Persian Gulf. For a company like Occidental, which has significant domestic production but is priced based on global benchmarks, these tensions provide a massive revenue "tailwind." However, this also introduces a layer of volatility; any cooling of tensions could lead to a rapid retracement in oil prices, testing the sustainability of OXY’s recent gains.

Historically, Occidental’s current trajectory echoes the recovery seen in the energy sector during the post-2022 period, but with a more sophisticated financial structure. Unlike the previous cycle, the company is now operating with a significantly lower interest burden and a more integrated relationship with its largest shareholder. This "new" Occidental is being built to withstand the cyclicality of the oil market through a combination of low-cost production and strategic industrial partnerships, a model that other companies in the sector are likely to emulate.

Looking Ahead: Dividends, Buybacks, and Potential Takeovers

In the short term, the market will be looking for Occidental to follow through on its promise of increased shareholder returns. Following the Q4 earnings beat, the board of directors approved an 8% increase in the quarterly dividend to $0.26 per share. As debt continues to fall toward the $10 billion target, analysts expect a massive share buyback program to be announced later in 2026. The transition from a story of "debt survival" to "capital return" is the primary catalyst that could drive the stock toward the $60 mark in the coming months.

The long-term question remains whether Warren Buffett will eventually move to acquire the entirety of Occidental Petroleum. With Berkshire already owning nearly a third of the company and now owning its chemical arm, a full takeover remains a persistent rumor on Wall Street. Such a move would be one of the largest acquisitions in Berkshire’s history and would represent a complete vertical integration of energy production and industrial chemicals. Whether this occurs or not, the strategic tie-up ensures that Occidental will have the financial flexibility to pursue carbon capture and other green energy initiatives that are critical for its long-term viability.

A Transformed Energy Powerhouse

The 9.4% jump in Occidental Petroleum’s stock is more than just a reaction to a strong earnings report; it is a validation of a years-long restructuring effort. By capitalizing on rising oil prices while simultaneously shedding non-core assets to Berkshire Hathaway, Occidental has successfully deleveraged its balance sheet and optimized its operations for a high-price environment. The company has effectively silenced critics who questioned its ability to manage the massive debt loads taken on during previous acquisition cycles.

As we move further into 2026, investors should keep a close eye on the sustainability of crude oil prices and the company’s ability to maintain its production efficiency in the Permian. While geopolitical risks provide a temporary boost, the true long-term value of Occidental lies in its operational discipline and its unique partnership with Berkshire Hathaway. For the broader market, Occidental serves as a bellwether for the energy sector’s ability to generate significant free cash flow and reward shareholders in an era of heightened global uncertainty.

This content is intended for informational purposes only and is not financial advice.