What happened

After crashing 10% in the first week of August, Occidental Petroleum (OXY -0.02%) stock turned around swiftly to recoup all of those losses and then some in the second week. As of 2 p.m. ET Friday, the oil stock was up 11.4% through this week, according to data provided by S&P Global Market Intelligence.

Crude oil prices may have climbed higher this week, but the real reason why Occidental Petroleum stock jumped this week had little to do with oil prices.

So what

The oil and gas sector has delivered some of the best-performing stocks this year, thanks to crude oil prices hitting multiyear highs in March. Occidental Petroleum stock more than doubled in just the first half of the year but has cooled off since alongside oil prices. Yet Warren Buffett continues to provide the oil stock a fill-up every time it slows down.

On Aug. 8, Buffett's Berkshire Hathaway disclosed having purchased 6.68 million shares of Occidental between Aug. 4 and 8.

Shares of the oil giant soared on the update, as investors see Buffett's persistent interest in the stock as a stamp of approval on Occidental's prospects. With his latest purchase, Buffett's stake in Occidental has shot up to 20.2%, which also means Berkshire Hathaway will now start adding a proportionate amount of Occidental's earnings to its own. Logically, it wouldn't do so if it didn't believe in Occidental's growth prospects.

Buffett, in fact, first disclosed a position in Occidental's common stock only in March this year. Acquiring a 20% stake in just about five months speaks volumes about Buffett's belief in the oil company, and that's primarily what encouraged investors as well to pump some money into the oil stock this week, especially after its recent drop.

Now what

To be sure, Occidental is firing on all cylinders. It generated its highest-ever free cash flow, worth $4.2 billion, in the second quarter and repaid almost 19% of its outstanding debt, or nearly $4.8 billion, during the quarter. Having hit its debt reduction goal earlier than projected, Occidental also restarted its share repurchase program and is now in a position to grow its dividends at a rapid pace.

In fact, Occidental is now confident of increasing its dividend payout even at the West Texas Intermediate (or WTI) crude oil price of $40 per barrel. Buffett loves a financially strong company that pays dividends, and Occidental stock offers just that.