Enterprise Products PartnersEPD

Saudi Arabia shut down its East-West crude pipeline, a vital route that bypasses the Strait of Hormuz, after several attacks. This closure removes a key alternative for moving oil out of the region and comes as a planned meeting to discuss safe shipping lanes in the Middle East was postponed.

For Enterprise Products Partners, higher energy prices and global supply disruptions generally increase the value of its U.S. infrastructure. As a company that operates the pipes and terminals that export American oil and gas to the rest of the world, it often sees higher demand for its services when international supplies are under threat.

Source: Bloomberg Markets and Finance

Diesel prices in the US have climbed past $6 a gallon, a new record high. This rise is part of a broader surge in energy costs that is keeping inflation high as the market waits for the Federal Reserve to decide on interest rates.

For a company like Enterprise Products Partners, which owns the pipelines and terminals that move these fuels, high prices generally reflect tight supplies and high demand. While the company earns its money from the volume of liquid it moves rather than the price itself, high fuel prices often encourage more production and export activity, which keeps its network busy.

Source: Bloomberg Markets and Finance

Oil prices have continued to climb this week, with Brent crude reaching $105 per barrel. This follows a stretch of rising tensions in the Middle East that has disrupted shipping and raised fears about global energy supplies. At the same time, US gasoline prices reached a record high over the Labor Day weekend.

For a company like Enterprise Products Partners, which operates the pipelines and terminals that move American energy, high prices and global supply worries generally lead to more demand for US exports. The company earns fees based on the volume of oil and gas moving through its system. As long as American producers keep pumping to meet this global demand, the company's network of pipes and export hubs remains highly valuable.

Source: Bloomberg Markets and Finance

Global oil prices moved higher after US forces destroyed five Iranian tankers on Tuesday. The strikes followed attempts to hit a US Navy ship and took place near a major export hub. These rising tensions in the Middle East create a more volatile energy market and generally push up the price of crude oil.

For a company like Enterprise Products Partners, higher prices and global supply concerns often lead to more demand for American energy. As a major owner of the pipelines and export terminals that move US oil and gas to the rest of the world, the company benefits when producers increase their output to fill the gap in global supply.

Source: Bloomberg Markets and Finance

Diesel prices hit a record high this week, which adds a new layer of cost for energy infrastructure companies. Enterprise Products Partners uses a lot of fuel to run the trucks and heavy equipment needed to maintain its 50,000 miles of pipelines and terminals. While higher fuel prices often mean more drilling activity and higher volumes for the company to move, they also eat into the profit earned on every barrel.

At the same time, a strong jobs report has raised the chance that interest rates will stay higher for longer. This matters because Enterprise Products Partners often borrows large amounts of money to build new export terminals and pipelines. If borrowing costs do not come down as soon as expected, it could make future expansion projects more expensive to finish.

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