The Best Energy Stock to Buy With Oil Near $105 Isn't an Oil Producer

With oil trading around $105 per barrel amid Middle East conflict, the article presents Enterprise Products Partners as less directly exposed to commodity prices because its midstream business earns fees tied more to volumes than oil prices. Its distribution yield is roughly 6%, the distribution has increased annually for 28 years, and 2025 distributable cash flow covered it 1.7x. Enterprise also plans $6.5 billion in capital investment through 2029; the piece emphasizes income and steadier growth rather than a near-term catalyst.

Analysis

The key distinction is lower direct commodity-price sensitivity, not immunity to energy or macro shocks. For EPD, the more relevant operating variables are throughput, contract structure, producer activity and customer credit. A prolonged price spike could eventually support drilling and volumes, but that benefit may arrive with a lag; conflict-related outages or export-route disruption could instead reduce flows or increase operating risk. Verify segment-level volume, fee-based contract mix and counterparty exposure before treating the business as fully insulated.

The income case is also exposed to rates and valuation: a high yield can lose relative appeal if Treasury yields rise or credit spreads widen, even if distribution coverage remains sound. Planned investment creates a second-order question—whether incremental projects earn attractive returns and are funded without weakening balance-sheet flexibility—not simply whether capex grows.

Near term (days to weeks), crude volatility may drive energy-sector flows more than EPD fundamentals. Over 1–3 months, watch rates, credit spreads and quarterly throughput/guidance. Over 6–18 months, project execution, volume growth and distribution growth determine whether the yield is supported by durable cash generation. The contrarian risk is that investors may over-credit “toll-road” stability: contracts, volumes and counterparties still matter, while a yield premium may reflect rate and MLP-specific risks rather than a mispricing.

Key Decisions for Investors

• Do not chase EPD solely as a hedge against falling crude. Consider a staged long on a rate- or sentiment-driven pullback, conditional on no deterioration in throughput, distributable-cash-flow coverage or leverage indicators; the thesis is income plus lower direct commodity beta, not a guaranteed distribution.
• For a relative-value expression, consider long EPD versus a crude-sensitive energy exposure such as XLE only if the intended view is that income and fee-based cash flows outperform upstream earnings. Keep the position modest: this is an imperfect hedge, and EPD can lag materially during a sustained oil rally. Reassess if the relative spread widens despite stable EPD operating metrics.
• Before sizing, verify the latest distribution coverage, debt maturities and funding mix for the planned investment program, segment volumes, contract terms and customer concentration. Treat any deterioration in coverage or guidance, sustained volume decline, or widening credit spreads as thesis-falsifying signals.
• Catalyst watch: quarterly results and guidance over the next 1–3 months, benchmark interest rates and credit spreads, and evidence over 6–18 months that projects add volumes and cash flow at adequate returns. If Treasury yields rise sharply or project returns disappoint, the yield may not protect the unit price.