Occidental Petroleum stock soars 23%—but is the rally overdone?

Occidental Petroleum (OXY) stock has climbed sharply in recent months, rising 23% since late February. The shares closed up another 1.49% on Friday, reaching $65.32. Analysts now question whether the stock's rapid growth has pushed its valuation too high. OXY's price surge reflects broader trends in the oil market. The stock moves closely with West Texas Intermediate crude prices, which have stayed elevated due to geopolitical tensions. Since Russia's invasion of Ukraine in 2022, OXY has seen strong long-term gains, jumping from post-2022 highs to around $65 by late March 2026. Over the past year, the stock is up 61.88%, with a 26.32% rise in the last 30 days alone.

Revenue at Occidental has fallen from a 2022 peak of $36.6 billion to $21.6 billion in 2025 as commodity prices normalised. Yet, the stock continues to benefit from fears over supply disruptions, including tensions linked to Iran. This has driven energy shares higher in early 2026, helping OXY hit new 52-week highs in March.

With the stock now trading at $65.32, some analysts argue it is overvalued. Average price targets sit between $59.11 and $60.28, well below the current level. The market appears to be pricing in expectations of stronger oil prices over the next six to nine months.

For traders looking to capitalise on high premiums, selling out-of-the-money covered calls has become an attractive strategy. A $73 call option expiring on May 1 offers a midpoint premium of $1.12, though there is only a 23% chance OXY will reach that level by then. Further out, the May 2026 $70 call carries a premium of $1.80, reflecting sustained optimism in the longer term. OXY's share price has risen by nearly $20, or 43.6%, since mid-February, outpacing many analyst expectations. The gap between current levels and price targets suggests investors are betting heavily on oil's future direction. For now, the stock remains tied to energy market volatility and geopolitical risks.