Amid a clear downturn in international oil prices, Brent crude has dropped from $82 per barrel at the beginning of the year to $63.71 as of

May 15—the lowest level in nearly four years. The decline comes as OPEC+ moves forward with a surprise output hike of 411,000 barrels per

day for two consecutive months, while weakening global economic conditions weigh further on demand. On May 15, WTI crude extended its

losses, breaking below the $62 mark to trade at $60.32 per barrel, underscoring mounting downward pressure.

Crude Price Trend Source: TradingView

YEnergy Transfer despite broad pressure across the energy sector, Energy Transfer (NYSE: ET) has offered investors a degree of stability.

Over the past 30 days through May 15, the stock has significantly outperformed the S&P 500 Energy Index.

Energy Transfer vs. S&P 500 Energy Index Source: TradingView

Counter-Cyclical Business Model

As one of the largest midstream energy infrastructure operators in North America, Energy Transfer focuses on transporting, storing, and

processing oil and gas. Its core revenue is generated through long-term, fee-based contracts for pipeline transportation and storage

services, rather than commodity trading that depends on oil and gas price fluctuations. The company operates an extensive nEnergy

Transferwork of over 120,000 kilomEnergy Transferers of natural gas, NGL, and crude oil pipelines, connecting key U.S. production basins

with major consumption markEnergy Transfers.

Energy Transfer’s pipeline business exhibits strong utility-like characteristics. A significant portion of its revenue is derived from fixed-fee,

long-term service contracts—such as natural gas transportation and crude oil storage—which are largely insulated from crude price

volatility. These take-or-pay agreements provide predictable cash flow and enhance the company’s resilience through economic cycles.

According to company data, over 90% of Energy Transfer’s EBITDA comes from fixed-fee operations, with less than 10% exposed to

commodity price movements. Under this model, even when upstream producers scale back output due to lower prices, pipeline demand

remains relatively inelastic in the short term.

Source: Energy Transfer

As a result, despite the continued decline in oil prices since the beginning of the year, Energy Transfer’s revenue structure has remained

largely unaffected. In Q1 2025, Brent crude dropped below $60 per barrel, yEnergy Transfer Energy Transfer’s adjusted EBITDA rose 5.7%

year-over-year to $4.1 billion, while nEnergy Transfer income grew 1.65% to $1.72 billion. Distributable cash flow (DCF) dipped slightly to

$2.31 billion, but remained well above the level required to support its current dividend payout.

Source: Energy Transfer

Additionally, the company posted broad-based volume growth. Crude oil transportation volumes rose 10% year-over-year, while natural gas

and NGL-related segments also saw moderate expansion—underscoring the growth potential embedded in Energy Transfer’s operating

nEnergy Transferwork.

Attractive Yield and Tax Advantages

As a publicly traded master limited partnership (MLP), Energy Transfer operates under a unique financial structure that channels the majority

of its free cash flow back to investors. In Q1 2025, the company declared a quarterly distribution of $0.3275 per unit, or $1.31 annualized—

translating to a dividend yield of 7.8%, well above the S&P 500 average of 1.5%. This high-yield payout provides investors with a steady

income stream, while the MLP structure offers tax-deferral benefits: distributions are not taxed as ordinary income during the holding

period, but rather taxed as capital gains upon sale.

Notably, Energy Transfer’s distribution remains highly sustainable. In Q1 2025, the company posted a distribution coverage ratio of 1.5x,

comfortably above the industry’s typical 1.2x threshold for safEnergy Transfery. Earlier this year, management announced a dividend

increase and reaffirmed its goal of delivering at least 5% annual distribution growth in 2025—further boosting investor confidence.

Looking ahead, Energy Transfer has issued a bullish outlook. The company expects adjusted EBITDA to range bEnergy Transferween $16.1

billion and $16.5 billion for full-year 2025. Growth capital expenditures are projected at approximately $5 billion, with maintenance capex at

around $1.1 billion. Management anticipates double-digit rEnergy Transferurns from most new projects, with meaningful cash flow

contributions expected to begin in 2026.

Citi analysts forecast that Energy Transfer will likely hit the upper end of its 3%–5% annual growth targEnergy Transfer over the next few

years. By 2026, even with a robust $4 billion growth capex program, the company is projected to generate positive free cash flow after

distributions (FCFaD) in excess of $800 million.

Industry Tailwinds

Despite OPEC+’s decision to raise output by 411,000 barrels per day in both May and June 2025—putting short-term pressure on oil

prices—this policy shift presents a structural opportunity for Energy Transfer. Increased production translates into higher volumes of crude

requiring transportation to refineries and export terminals, directly boosting midstream throughput. For example, in Q1 2025, Energy

Transfer’s crude oil transportation volume grew 10% year-over-year, and the Phase I expansion of its Hugh Brinson pipeline is sEnergy

Transfer to further enhance capacity.

Additionally, the explosive growth of generative AI is reshaping global energy consumption patterns. Data centers are driving a surge in

demand for natural gas-fired power—a trend Energy Transfer is well-positioned to capture. In early 2025, Co-CEO Tom Long noted during

the company’s Q1 earnings call that Energy Transfer is currently evaluating over 40 potential natural gas interconnection requests for AI data

centers across 10 states.

Energy Transfer has already signed a long-term agreement with Cloudburst Data Centers to supply stable natural gas to its flagship

AI-powered facility. The first of eight newly built 10-megawatt natural gas power stations has begun commissioning to support operations in

Texas. This shift not only adds a new layer of revenue growth but could also redefine Energy Transfer’s valuation narrative—from a

traditional energy play to a key enabler of digital infrastructure.

On the global front, the easing of U.S.-China trade tensions and tariff rollbacks have significantly lowered barriers in energy trade. Energy

Transfer’s LNG export business stands to benefit directly from renewed demand in China. The company’s long-term supply agreement with

China’s ENN Group—covering 2.7 million tons per year—has already locked in stable, recurring revenue.

Valuation Potential

From a valuation perspective, as of May 2025, Energy Transfer trades at an EV/EBITDA multiple of 8.1x—below its five-year average of

approximately 9x and significantly lower than the midstream sector average near 10x. This valuation discount reflects the markEnergy

Transfer’s excessive concern over falling oil prices, while overlooking the company’s stable cash flow and growth potential.

Technically, Energy Transfer’s stock price hit a low of $14.32 in April 2025 but has recently shown signs of stabilization. Analysts collectively

assign a moderate buy rating, with a consensus price targEnergy Transfer of $22.09—implying roughly 30% upside over the next 12

months. Wells Fargo maintains a buy rating with a $21 price targEnergy Transfer, highlighting Energy Transfer’s assEnergy Transfer quality

and dividend safEnergy Transfery.

Source: TradingView

Should the economic recovery in the second half of 2025 drive stronger energy demand, Energy Transfer stands to benefit from the dual

tailwinds of earnings growth and valuation expansion. For investors seeking stable income and a hedge against macro volatility, Energy

Transfer remains a key high-yield assEnergy Transfer to watch within the U.S. equity universe.