February 26, 2024

Warren Buffett Expands Occidental Petroleum Holdings Amidst Tech Fever

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In a strategic move away from the tech-dominated market, Warren Buffett has increased his stake in Occidental Petroleum (OXY) during the first days of February. The renowned investor, known for his long-term investment philosophy, spent approximately $245.7 million on over 4.3 million shares of OXY between February 1 and February 5, according to a regulatory filing.

Buffett’s purchase comes amid a period where the market’s attention has been primarily focused on tech giants, with Nvidia (NVDA) drawing significant interest. Occidental Petroleum’s stock (OXY) saw a modest gain of 0.7% during premarket action on Tuesday. Despite a slight fall on Monday to $56.98, OXY shares had climbed to nearly $67 in October 2023. However, the stock has since dipped below its 200-day and 50-day moving averages in early 2024.

Berkshire Hathaway, led by Warren Buffett, currently holds a 27.77% stake in Occidental Petroleum, based in Houston. Buffett and Berkshire Hathaway were granted approval by the Federal Energy Regulatory Commission in August 2022 to purchase up to 50% of available OXY stock. The recent purchase follows Buffett’s addition of 3.92 million OXY shares ahead of Occidental Petroleum’s Q3 earnings in November 2023.

Despite Berkshire Hathaway’s significant holdings, Buffett has stated that he has no intention of taking over the company. The oil market dynamics were highlighted by Occidental Petroleum CEO Vicki Hollub, who spoke at the Smead Investor Oasis Conference in Phoenix. She emphasized that the world is facing a supply shortage by the end of 2025, attributing it to the failure to replace crude reserves rapidly enough.

Hollub pointed out that about 97% of the oil produced today was discovered in the 20th century, and the world has replaced less than 50% of the crude produced over the last decade. Although the current market is oversupplied, Hollub anticipates a shift in the supply and demand outlook by the end of 2025, resulting in a shortage. The ongoing tension in the Middle East and concerns over China’s economy are seen as factors that could influence oil prices in the coming years.

Financial Desk

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