Geopolitical conditions greatly shape oil prices. When conflict erupts near oil producing areas, prices rise, and naturally, when there is peace, they fall. Several important mechanisms explain this relationship. Wars embed a “geopolitical risk premium” on oil prices, reflecting fears of supply disruptions. Silence eliminates that premium. The conflict also results in sanctions that block oil exports; Diplomatic decisions open up that supply and ease market tensions. War destroys infrastructure and drives away investment, while peace attracts the capital needed to restore and increase productivity.
Important posting routes such as the Strait of Hormuz become dangerous and expensive during conflict, increasing costs passed on to consumers. Peace restores efficient and affordable transportation. Finally, prolonged conflict suppresses economic growth and energy demand, while stable relations allow countries to cooperate on energy policy more effectively. In the end, every barrel of oil has its price which reflects the stability of the country, and peace lowers that price. Peace may be in the way of conflict with Iran, and although current prices will drop at least 10% to 15% on the announcement of the end of hostilities, the $50 to $60 level that Wall Street predicted for oil in 2026 is now history.
Quick Reading:
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Oil prices are moving heavily on the news about the war with Iran.
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Many on Wall Street in the energy sector feel that the current benchmark price of oil could drop by 10% to 15% if a peace agreement is reached to end the war.
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Wall Street estimated oil price levels for 2026 at the end of last year were $50 to $60 per barrel of WTI. Those rates are now considered too low.
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Warren Buffett again Berkshire Hathaway (NYSE: BRK-B) has only two energy stocks, but they are the kind of companies that are built to survive and are valuable assets in a portfolio. Additionally, both companies Buffett and, now, Greg Abel will continue to hold indefinitely, as shown by Buffett adding more shares to one in a big way in the fourth quarter of 2025 and by continuing to add to the other over the past few years. That was an incredibly well-timed move as oil had skyrocketed during the war with Iran. Although oil has a war payoff now, that will end when and if the United States resolves the war with Iran, and there is a good chance that it will, as the fighting has greatly hindered the ability of Middle Eastern countries to sustain a long-term conflict.
Most of the Wall The road was not good for energy as we finish the year 2025, with many analysts indicating that the base price of West Texas Intermediate in 2026 will be somewhere in the $50 to $60 range at best. Given the dramatic changes in the global energy sector since the conflict began in late February, many top firms now expect oil to reach $70 to $75, driven by changes in exploration and production and supply. One thing is certain: the world’s highest price level will be very profitable for the two companies owned by Berkshire Hathaway. Both are still good long-term stocks for growth and inbound investors. Another warning for those looking to add energy exposure is to buy partial positions now and wait for an agreement between the US and Iran before buying more stocks. Although both are off the high when the attacks on Iran first took place and offer better entry points than two months ago, oil is still set to fall sharply once a permanent deal and resolution is reached.
Chevron
Chevron (NYSE: CVX) is an American multinational energy company specializing in oil and gas. The integrated giant is a safe bet for investors looking for exposure to the energy industry and pays a hefty dividend of 3.79%, up from 5% earlier this year. Chevron operates integrated energy and chemical businesses worldwide through its subsidiaries. Berkshire Hathaway bought an additional 8 million outstanding shares in the fourth quarter and now owns 130,156,362 shares, equal to 6.6% of the float and 7.2% of the portfolio.
Company it works in two stages. The Upstream segment is involved in the following:
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Exploration, development, production, and transportation of crude oil and natural gas
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Processing, liquefaction, transportation, and reprocessing related to liquefied natural gas
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Transportation of crude oil by pipeline, and transportation and storage
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Natural gas marketing, and gas-to-liquids industry
Downstream part includes:
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Refining crude oil into petroleum products
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Selling crude oil, refined products, and lubricants
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Production and sale of renewable fuels
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Transportation of crude oil and refined products by pipeline, ocean liner, motor vehicle, and rail car
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Manufacturing and marketing of commodity fuel chemicals, industrial plastics, and fuel additives and lubricants.
It also involves money management, debt financing, insurance operations, real estate, and technology businesses.
This bank America has a buy rating with a price target of $206.
Occidental Petroleum
After years of building this position, Buffett and Berkshire Hathaway finally have money in the company, which pays a dividend of 1.82%. Occidental Petroleum (NYSE: OXY) is a multinational energy company with assets primarily in the United States, the Middle East, and North Africa. The company is an oil and gas producer in the United States, including the Permian and DJ basins and the offshore Gulf of America.
Berkshire Hathaway owns 264,941,431 shares, which is 26.6% of the float and 4.4% of the portfolio.
Occidental’s The oil and gas segment explores, develops, and produces oil (including condensate), natural gas liquids (NGLs), and natural gas. The midstream and marketing segment purchases, markets, gathers, processes, transports, and stores oil (including condensate), NGLs, natural gas, carbon dioxide (CO2), and energy. This segment provides flow assurance, increases the value of its oil and gas, and improves the company’s transportation and storage capacity. It also invests in companies doing similar activities, including low-carbon business ventures.
The latter is notable development was Occidental’s decision to sell its OxyChem subsidiary to Berkshire Hathaway, with a large portion of the proceeds expected to strengthen the company’s balance sheet and focus its oil and gas business. The move was particularly interesting because Buffett has reportedly long been interested in OxyChem, and Berkshire now owns the business entirely. Berkshire Hathaway completed its purchase of OxyChem from Occidental on January 2, 2026, giving Buffett full ownership of the chemical business while providing Occidental with $9.7 billion in cash to reduce debt and sharpen its energy focus.
Mizuho has it an overweight rating and a $72 price objective for this stock.
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