Warren Buffett's Berkshire Hathaway fund took an interest in Occidental Petroleum in the first quarter of the year, acquiring a 20% stake as part of its broader purchases in the oil market:
- Markets circulated news of Berkshire's willingness to acquire more than a 50% stake in the Texas-based oil producer. The fund has already received regulatory approval for this from the Federal Energy Regulatory Commission;
- Markets are speculating about a complete takeover of Occidental by Warren Buffett. In the past, the 'Oracle of Omaha' has acquired great businesses like GEICO, Coca Cola and BSNF early on, making the Berkshire fund's interest perceived as bullish for Occidental;
- Buffett has commented in the past on his interest in Occidental Petroleum, stressing that he sees the company as a long-term bet on rising oil prices, indicating that he believes the company is potentially best positioned to benefit from rises in 'black gold. Berkshire also holds nearly $10 billion worth of preferred shares and acquisition warrants at $59.62 (nearly 83.9 million shares);
- The key for the company will certainly be the price per barrel of oil, which continues to be weighed down by a possible recession and a possible increase in supply following the admission of reserves from Iran. However, there are many indications that OPEC+ will decide to cut production in the event of Iran's return to the market which could support price increases. Oil has bounced off $94, demand may want to test the $100 mark again.
Occidental Petroleum (OXY.US) stock chart, D1 interval. The share price has risen more than 130% since the beginning of 2022. However, the increases have slowed down around $74, which coincides with the peaks of the first half of the year and the 61.8 Fibonacci retracement. Source: xStation5
