Midstream Stocks Gain Traction Amid Iran War Uncertainty
The ongoing uncertainty surrounding the Iran war has pushed oil prices above $100 per barrel, causing lasting inflationary pressure in the market. This has made investors risk-averse and led them to seek out stable stocks that can weather the storm. Midstream companies have emerged as a safe haven due to their low exposure to volatility in commodity prices.
Midstream players generate stable fee-based revenues from transportation and storage assets, which are booked by shippers for long-term contracts. This business model is relatively low-risk and less exposed to oil and gas price risks compared to producers. Kinder Morgan (KMI), MPLX LP (MPLX), and The Williams Companies (WMB) are three midstream stocks that are well-poised to benefit from this trend.
Kinder Morgan has a vast network of oil and gas pipelines spanning 78,000 miles, generating stable fee-based revenues from take-or-pay contracts. Its business model makes it resilient to volume and commodity price risks, with a Zacks Rank #3 (Hold).