Warren Buffett's Struggling Investment in Occidental Petroleum

Author: Evelyn Baker Updated: 10-17-2025 06:59 PM

Warren Buffett's Investment Challenges

Recently, shares of Occidental Petroleum have taken a significant hit, dropping nearly 29% since mid-April. This steep decline is affecting Warren Buffett and the way he approaches his investments.

Impact of Falling Oil Prices

The downturn in Occidental's stock price coincides with a drop of about 23% in crude oil prices. This situation has raised worries about demand and an oversupply of oil in the market.

Berkshire Hathaway, which boasts a strong $13 billion investment in Occidental Petroleum, could be in a tricky spot as projections indicate this stake might be losing value. Buffett’s investment, comprising a 29% ownership interest, reflects his long-term view on the energy sector.

Market Dynamics and Stock Performance

The current pressure on oil prices stems from several factors, including economic slowdowns and record output from U.S. oil companies. These dynamics are creating additional strain on Buffett’s investments in Occidental Petroleum, which are currently trading just above the $50 mark.

Berkshire Hathaway's Position

For the first time in more than two years, Occidental’s stock price has fallen below the previous support level of $55 to $60 that Buffett had come to depend on. This development raises questions about future strategies for both Buffett and Berkshire Hathaway as they weigh their options in this uncertain market.

Strategic Considerations Moving Forward

Investor Bloomstran notes that Buffett holds warrants for an additional 83.5 million shares of Occidental Petroleum at a strike price of $59.62. Since this is substantially higher than the current market rate, there’s speculation on whether Buffett might take this chance to boost his holdings at a lower price.

The Future of Shareholder Value

One possible strategy could involve Occidental Petroleum launching a stock buyback program to enhance shareholder value. However, CEO Vicki Hollub has mentioned that the company’s priority will be to significantly reduce debt before exploring such options.

During the recent earnings call, Hollub set a goal to cut debt down to about $15 billion, suggesting that a potential buyback could be on the table around late 2026 or early 2027.

Conclusion

Buffett has a history of focusing on long-term value rather than merely reacting to short-term price movements. As the situation with Occidental Petroleum continues to unfold, it will be fascinating to observe how Berkshire Hathaway manages these challenges in an ever-changing economic climate.

Frequently Asked Questions

What has caused the decline in Occidental Petroleum shares?

The shares have declined due to a significant drop in crude oil prices, concerns about demand, and excess supply in the market.

How much of Occidental Petroleum does Berkshire Hathaway own?

Berkshire Hathaway has a 29% stake in Occidental Petroleum, which is valued at approximately $13 billion.

What is the strike price of the warrants held by Buffett for Occidental?

Warren Buffett holds warrants to buy additional shares of Occidental at a strike price of $59.62.

Is there a possibility of Occidental Petroleum buying back its shares?

Occidental is considering a buyback program but plans to reduce its debt to $15 billion first.

What might Warren Buffett do in light of the stock's decline?

Buffett may consider purchasing additional shares due to his strategy as a long-term investor, although he has stated he does not intend to acquire the entire company.

About The Author

Greetings, I'm 32-year-old author and financial specialist Evelyn Baker. My introduction into the financial industry started with an economics degree and continued with a wealth of experience in wealth management and financial consulting. My great passion over the years has been assisting people and companies in making wise, well-informed decisions to reach their financial objectives.

My goal with writing is to simplify difficult financial ideas into understandable, doable guidance. My goal in writing many books and articles is to make personal finance understandable to everyone, irrespective of their experience or background. I want to give readers the information they need to take charge of their financial futures, from investing and retirement planning to budgeting and saving.

Along with my writing, I lead webinars and workshops where I provide doable advice and methods for achieving financial success. To reach a larger audience, I also frequently contribute to financial blogs and publications. My method is always to offer doable, real-world guidance that can actually improve people's lives.

Aside from my job, I like to cook, travel, and experience other cultures. I work hard to apply my belief in the value of a balanced life to my financial counsel. My goal in working is to encourage and enable people to succeed financially so they may lead the best lives possible.

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