The war with Iran is having an enormous impact on the global oil market. According to an estimate by Goldman Sachs, oil production from the Persian Gulf region is down 57% from its pre-war level, or about 14.5 million barrels per day. The world is currently covering the shortfall by drawing oil from storage, including a record 400 million barrel release by members of the International Energy Agency (IEA).
Here's a look at some of the energy companies built for moments like these.
Image source: Getty Images.
American's emergency oil stockpile
The U.S. is helping offset the impact of the Strait of Hormuz closure by adding supply to the market. The Department of Energy (DOE) is releasing 172 million barrels of oil from the Strategic Petroleum Reserve (SPR) as part of the IEA's record release.
The SPR is the world's largest emergency oil stockpile, with a capacity of 714 million barrels. The SPR relies on energy companies to transport crude oil from its four storage sites along the U.S. Gulf Coast. The SPR feeds into three oil pipeline distribution systems (Seaway, Taxoma, and Capline) that connect this oil to refineries along the Gulf Coast (and elsewhere) as well as three marine terminals (Seaway, Nederland, and St. James).
The energy companies supporting the SPR release
Enterprise Products Partners (EPD +0.25%) and Enbridge (ENB 1.49%) co-own the Seaway Pipeline Company, which operates the Seaway Pipeline and marine facilities. Their system plays a crucial role in helping the DOE transport oil from the SPR to U.S. refineries and global markets via their export docks. Additionally, both companies own other vital oil infrastructure. Enterprise operates several oil pipelines, storage terminals (including at the critical Cushing, OK, hub), and export facilities. Meanwhile, Enbridge operates North America's longest and most complex crude oil transportation system, moving 30% of the crude oil produced on the continent. It also operates the Enbridge Ingleside Energy Center, the largest crude oil export terminal by volume.
NYSE: ENB
Key Data Points
Plains All American Pipelines (PAA +1.24%) is a leader in U.S. oil infrastructure. It operates 20,000 miles of crude oil pipelines, including an interest in the Capline Pipeline, which supports SPR releases. Additionally, Plains All American has 75 million barrels of commercial crude storage capacity and owns five marine terminals in the U.S. Its infrastructure is crucial to supporting the flow of oil from wells to market centers.
Energy Transfer (ET 0.55%) owns the Nederland terminal, which connects directly with the SPR. That facility, as well as its Houston terminal, played a vital role in the 2022 SPR release following Russia's invasion of Ukraine. Additionally, Energy Transfer operates extensive oil infrastructure across the U.S., including 17,950 miles of oil pipelines and a crude oil terminal with 73 million barrels of capacity.
Filling the gap
Enbridge, Enterprise Products Partners, Plains All American Pipeline, and Energy Transfer operate crucial crude oil infrastructure. Their systems are assisting the DOE in getting oil from the SPR to U.S. refineries and global markets to help offset the supply issues in the Persian Gulf. As a result, these companies should see higher volumes this year, boosting their cash flow. That will provide additional support for their high-yielding and steadily rising dividends.
