The global energy market has been upended by the geopolitical conflict in the Middle East, sending oil prices sharply higher. Occidental Petroleum (OXY +2.67%) appears better positioned to benefit from high oil prices than Chevron (CVX +2.88%). But don't pull the trigger just yet. There's a very important reason you may want to own Chevron instead, and it may help explain why Berkshire Hathaway (BRKA -0.84%)(BRKB -0.87%) owns both.
Warren Buffett didn't make investment decisions lightly
Warren Buffett once described investing as a baseball game where nobody is calling balls and strikes. The point of that folksy example is to highlight that investors don't have to swing at every pitch; they can just wait for the pitches they like. And that's exactly how Buffett handled Berkshire Hathaway's portfolio, cherry-picking the stocks he wanted inside of it.
Image source: Getty Images.
It isn't an accident that Buffett bought Occidental Petroleum and Chevron. It was a conscious decision. And it is important to understand that they are not interchangeable energy investments. There is a notable difference between their business models.
Occidental, which most investors just call Oxy, has been focused on growing its production profile. Buffett helped that process along when he assisted Oxy in buying Anadarko Petroleum. In fact, Oxy beat out Chevron for that deal. More recently, Berkshire Hathaway bought Oxy's chemicals business. Berkshire and Oxy have a long history, but the second deal highlights a clear focus on energy production.
That's good right now with oil prices at lofty levels. For investors looking to capitalize on high energy prices, Oxy could be a better choice than Chevron. For now.
OXY Occidental Petroleum
NYSE · As of 4:00 PM ET 10/23/26
Chevron is built to survive the full energy cycle
The problem with that story is that oil prices have a long history of being volatile. They rise and fall in often dramatic fashion, driven by factors such as supply and demand, natural and man-made disasters, and geopolitical conflicts. When the event that's driving oil prices higher eventually passes, prices usually fall. When that eventually happens again, as it has every time before, Occidental will be more exposed to the downturn than Chevron.
Chevron is one of the world's largest energy companies. It is what is known as an integrated company because it intentionally has exposure across the entire energy value chain, from the upstream (production) through the midstream (pipelines) and all the way to the downstream (chemicals and refining). That diversification helps to soften the impact of oil price swings.
CVX Chevron
NYSE · As of 4:00 PM ET 10/23/26
Chevron's dividend, which has been increased annually for 38 years, is the best example of how resilient its business model is. Notably, the debt Oxy took on to buy Anadarko forced it to cut its dividend in 2020 when oil prices plunged during the coronavirus pandemic. That event highlights the more aggressive approach that Oxy is taking with its business.
While Oxy's leverage has fallen dramatically since then, Chevron's 0.2x debt-to-equity ratio remains below Oxy's 0.35x. So, even from a balance sheet perspective, Chevron is better positioned to deal with adversity than Oxy. If you are looking for an energy stock you can comfortably hold for the long term, even during oil downturns, Chevron may be a better choice.
Dividend investors should go with Chevron
Oxy's dividend yield is roughly 1.8% as of this writing, while Chevron's is 3.1%. If you are looking for income, Chevron wins that comparison. But it also wins in dividend consistency, given its impressive dividend track record. While Occidental Petroleum may be better positioned to benefit from rising energy prices, it is highly likely that Buffett bought both companies as a hedge against a fall in oil prices. If you have to pick between them, Chevron's diversified and resilient integrated business model will likely be the better buy-and-hold option.
