As the war in Iran enters its third week, the world stands still. While concerns remain about the escalation of the war and the countries involved deepening their involvement, the main economic worries are about rising oil prices. Notably, April WTI Crude Oil (CLJ26) prices saw a sharp jump of 48.2% from Feb. 28, the day when the first weapons of the US-Israeli joint force were dropped in Iran. So, while Tehran and the wider Middle East continue to boil over, the American public is paying more for gas at gas stations, like the damage from Operation Epic Fury.” they are not just beyond its shores.
While fuel prices have reached their highest levels since 2022, the cost of fertilizers such as urea has risen by 35%, the war-torn Gulf region produces about 50% of the world’s urea exports. This is slowly but surely reflected in the prices of daily essentials such as eggs (up 14% since Feb. 28), bread (up 5% since Feb. 28), and milk (up 3% since Feb. 28), among others.
So, as investment strategies move through this dire situation, which stocks can protect our portfolios? Well, surprisingly, it should be oil stocks. But which ones? Piper Sandler believes that bets should be hedged on these two words.
Piper Sandler’s first choice was also one of the last trades of the Oracle of Omaha, Warren Buffett, before he hung up his boots as CEO of Berkshire Hathaway. Founded in 1920, Occidental Petroleum (OXY) is a large integrated oil and gas company engaged in three core business segments, namely, oil and gas, chemicals, and carbon management.
With a market cap of 57.1 billion, OXY stock is up a whopping 39% year-to-date (YTD). This stock company paid a dividend of 1.80 %.
Coming in to its latest Q4 2025 results, Occidental had a mixed showing, although both net sales and profits were down from a year ago. Total sales of $5.4 billion were down 5.2% year-over-year (YoY). A 14.5% year-over-year decline in oil and gas sales to $4.8 billion was the cause, as daily production remained roughly flat at 1,246 thousand barrels of oil equivalent per day (MBOE/D) compared to 1,233 MBOE/D a year earlier.
Cash flow from operations decreased and reached $ 2.7 billion from $ 3.1 billion in the past, the company ends in 2025 with a cash balance of about two billion dollars. This was above short-term debt levels of $1.8 billion.
Despite all this, Piper Sandler raised his price target on the company’s stock to $66 from $54 previously. Citing its strong operating presence in the rich Delaware Basin, the brokerage firm expects the company to maintain its operating margins and continue its production levels.
Overall, the Wall Street community rated OXY stock as a consensus “Hold,” with a definite price target that has already been beaten. A high target price of $69 implies an upside potential of 19% from current levels. Of the 27 analysts covering the stock, six have a “Strong Buy” rating, one has a “Neutral Buy” rating, 17 have a “Hold” rating, and three have a “Strong Buy” rating.
Another favorite oil stock of Piper Sandler is Houston, TX-based Murphy Oil (MUR). Founded in 1950, Murphy Oil is an independent exploration and production (E&P) company. Its core activities include oil and natural gas exploration, drilling and production, and offshore and shale field development.
Its market capitalization at $5.3 billion is much lower than Occidental; however, the dividend yield of 3.80% is more than double. The stock is up 16% on a YTD basis.
Notably, Murphy’s latest quarter results were also mixed, with revenue missing but earnings beating estimates. Net income fell to $613.1 million from $699.6 million in the year-ago period. However, the total production of crude oil and natural gas has increased compared to the previous year. While the total production of crude oil and condensate in the three months ended December 31, 2025, was 92,702 barrels per day (compared to 91,460 barrels per day in Q4 2024), the total production of natural gas during the same period stood at 503,112, a growth rate of 4 cubic meters per year.
However, earnings fell 60% YoY to $0.14 per share as it managed to beat street expectations with a loss of $0.04 per share.
Net income from operations fell 42.4% from a year ago to $249.6 million as the company closed the quarter with a cash balance of $377.2 million. This was above the company’s short-term debt ratio of $281.3 million.
Meanwhile, Piper Sandler increased his price target on the stock to $41 from $33. The company believes that the value will add to the company through the use of large capacity and analysis work on the Hai Su Vang project in Vietnam during the first half of 2026, which can help its capital.
Therefore, analysts have given a consensus rating of “Hold” on MUR stock. Although the target price has already been exceeded, the high target price of $41 implies an upside potential of about 11% from current levels. Of the 18 analysts covering the stock, two have a “Strong Buy” rating, 15 have a “Hold” rating, and one has a “Strong Sell” rating.
With oil expected to fall below $150 per barrel, the outlook for oil commodities appears to be one of price appreciation. Both Murphy Oil and Occidental are dividend-paying companies with strong balance sheets and strong operating leverage in some of the world’s richest oil-producing regions. As such, Piper Sandler’s assertion is not to be laughed at.
Even those who don’t believe in the long-term story of oil and gas and believe that renewable energy is the way forward for our energy needs, short-term strategic trade-offs will not hurt these names.
As of the date of publication, Pathikrit Bose had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
