• OPEC+ production increases create opportunities in midstream energy infrastructure.
• Midstream companies may see higher volumes and stable, fee-based revenue.
• Essential infrastructure provides a strong competitive advantage for operators.
• Increased summer demand and oil supply could boost sector profitability.

Why I'm Watching the Energy World's Tollbooth Operators

Here we go again. The grand puppeteers at OPEC+ have pulled their familiar levers, signalling a boost in oil production just in time for the summer holidays. The headlines will scream about petrol prices and geopolitical chess, and speculators will place their bets on the wild gyrations of a barrel of crude. To me, that all feels a bit like a trip to the casino. I prefer to look at the house, the establishment that gets paid regardless of who wins or loses at the table.

In the world of energy, the house is the midstream sector. It’s not a glamorous business, I’ll grant you that. These companies don’t drill the wells or pump the petrol. They are the plumbers, the tollbooth operators, the landlords of the entire operation. They own the vast, unsexy network of pipelines, storage tanks, and processing facilities that are utterly essential for moving oil and gas from where it’s found to where it’s needed.

The Beauty of Being Boring

What I find so compelling about these companies is their business model. It’s beautifully, wonderfully dull. Most of them don’t really care if oil is trading at seventy or ninety dollars. Their revenue is largely tied to volume. They charge a fee for every barrel that flows through their pipes, a bit like a motorway toll. When OPEC+ turns up the production, it’s like rush hour traffic suddenly getting heavier. More volume means more tolls, which could translate into more predictable cash flow.

This insulates them, to a degree, from the commodity price rollercoaster that gives producers and their investors sleepless nights. While others are frantically checking market tickers, the midstream operators are just watching the meters tick over. It’s a pragmatic approach in a notoriously volatile industry, focusing on the movement of the product rather than its price.

The Established Giants

This isn't a sector for plucky upstarts. The barriers to entry are colossal. You can’t just decide to build a thousand-mile pipeline tomorrow. It requires eye-watering capital, a labyrinth of regulatory approvals, and decades of expertise. This has allowed giants like Enbridge and Enterprise Products Partners to build what are essentially regional monopolies. They own the critical arteries of the energy economy.

It’s this collection of established players, the ones who own the indispensable infrastructure, that forms the core of an investment theme like the Riding The OPEC+ Wave basket. The logic is that as more oil flows to meet summer demand, these are the companies that could stand to benefit from the increased traffic on their networks.

A Note on the Obvious Risks

Of course, no investment is a sure thing. There are risks here, and it would be foolish to ignore them. These companies face constant regulatory scrutiny and the ever-present threat of environmental incidents. And then there’s the big one, the slow but steady march towards a greener future. The long term transition away from fossil fuels is a genuine headwind.

However, I tend to be a pragmatist. That transition is a marathon, not a sprint. The world is likely to need a significant amount of oil and gas for decades to come, and as long as it does, it will need the infrastructure to move it. For now, the immediate dynamics of supply and demand present an interesting scenario. While the future may be electric, today’s economy still runs on oil, and someone has to own the pipes.

Deep Dive

Market & Opportunity

• OPEC+ has confirmed increased oil production to meet summer demand.
• Midstream companies benefit from higher pipeline volumes, not necessarily higher commodity prices.
• The business model is primarily fee-based, generating predictable cash flows from the volume of energy products transported or stored.
• The infrastructure, including pipelines and terminals, is essential for connecting oil and gas production to refineries and end-users.

Key Companies

• Enbridge Inc. (ENB): Operates North America's largest pipeline system, transporting approximately 30% of the crude oil produced in the region. Its network connects Canadian oil sands to U.S. refineries.
• Enterprise Products Partners L.P. (EPD): Owns a diversified portfolio of midstream assets, including pipelines, storage terminals, and processing facilities for various energy commodities.
• ONEOK Inc. (OKE): Specializes in natural gas and natural gas liquids (NGL) infrastructure. The company stands to benefit as increased oil production often leads to a rise in associated natural gas output.

Primary Risk Factors

• Regulatory and Political Hurdles: Pipeline projects can face significant delays or cancellations due to regulatory challenges or local opposition.
• Environmental Concerns: The risk of environmental incidents can lead to substantial cleanup costs and operational disruptions.
• Long-Term Energy Transition: The global shift toward renewable energy sources poses a long-term risk to the demand for fossil fuel infrastructure.

Growth Catalysts

• Increased Production Volumes: OPEC+ production increases directly translate to higher throughput for midstream operators.
• Seasonal Demand: Peak summer driving season traditionally boosts demand for fuel, increasing activity across the infrastructure network.
• Infrastructure Constraints: Years of underinvestment in new energy infrastructure have created capacity limitations, potentially allowing existing operators to charge premium rates.
• Energy Security: A heightened focus on domestic energy security underscores the strategic importance of existing pipeline and storage systems.

Investment Access

• The basket is available on Nemo, an ADGM-regulated platform.
• The platform offers commission-free investing and fractional shares starting from $1.
• All investments carry risk and you may lose money.