The Iran War Means $100 Oil, and These Pipeline Stocks Are the Safest Income Play in Energy Today

Core Viewpoint - WTI crude oil prices have surged 50% in a month, reaching $100 per barrel, driven by geopolitical risks related to the conflict with Iran, impacting energy markets significantly [1] Group 1: Midstream Pipeline Partnerships - Four midstream pipeline partnerships are positioned to benefit from higher oil prices as they earn fees based on the volume of hydrocarbons transported, not the price of oil [2] - The geopolitical situation regarding Iran is seen as a tailwind for these partnerships, enhancing their revenue potential [2] Group 2: Enterprise Products Partners (EPD) - Enterprise Products Partners has a market cap of $80 billion and a current price of $37.04, with a dividend yield of 5.87% and a history of 27 consecutive years of distribution growth [4] - The partnership reported record volumes despite WTI price fluctuations, with a natural gas processing inlet of 8.1 Bcf/d and total pipeline throughput of 14.1 million BPD-equivalent [5] - The Neches River NGL marine terminal Phase 2 is expected to enhance export capacity by Q2 2026, reflecting strong international demand for U.S. energy [5] Group 3: Energy Transfer (ET) - Energy Transfer has a market cap of $64 billion and a current price of $18.66, with a distribution yield of 7.10% [7] - The partnership has secured natural gas supply agreements for Oracle data centers, enhancing its infrastructure scale [9] - A Q4 EPS miss was attributed to non-cash impairment and interest expenses, not operational weaknesses [9] Group 4: MPLX - MPLX has a market cap of $58 billion and a current price of $57.37, with a dividend yield of 7.09% and a distribution growth rate of 12.5% year-over-year [10] - The partnership is expanding its Gulf Coast export infrastructure, with significant projects expected to enhance its value as global demand shifts [11] Group 5: Western Midstream Partners (WES) - Western Midstream Partners has a market cap of $16 billion and offers the highest yield in the group at 8.89% [12] - The partnership has seen record natural gas throughput and significant growth in produced-water services following an acquisition [13] - Despite its high yield, the partnership faces risks related to pricing volatility and expected throughput declines [14] Group 6: Common Characteristics - All four partnerships operate on a fee-based model, insulated from commodity price volatility due to take-or-pay and fixed-fee contract structures [15] - Increased drilling activity in response to high WTI prices will allow these pipelines to capture additional volume, reinforcing their income stability during geopolitical shocks [16]