MPLX Is Down 1% Since the Iran Conflict. 2 Things Investors Need to Know.

Oil prices have skyrocketed since the U.S. and Israel launched military attacks against Iran. WTI, the primary U.S. oil price benchmark, has risen from less than $70 a barrel before the conflict began to nearly $100 a barrel. The surge in oil prices has fueled a rally in most oil stocks.

However, units of MPLX (NYSE: MPLX) haven't gotten an oil-fueled boost. The master limited partnership (MLP) has lost nearly 1% of its value since the conflict started. Here are two things investors need to know about the pipeline company.

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MPLX has minimal direct exposure to crude prices

MPLX is a large, diversified midstream energy company that operates infrastructure and logistics assets to support the oil and gas industry. Its assets primarily generate durable, fee-based earnings underpinned by long-term contracts and government-regulated rate structures. As a result, MPLX has limited direct exposure to commodity prices.

For example, crude prices steadily declined last year, with WTI falling from a peak above $80 a barrel in early January to less than $60 a barrel by the end of the year. Despite that slump, MPLX's crude oil and products logistics assets grew their earnings by 4% last year, driven by higher pipeline volumes (up 3%) and rate increases (4% higher on average).

MPLX's volumes rose last year because its crude oil assets primarily support the operations of refining giant Marathon Petroleum. Demand for oil and refined products tends to rise as prices fall, which boosts the volumes flowing through MPLX's network. With crude prices surging this year, demand could fall, potentially negatively affecting the company's crude-related volumes.

MPLX has a gas-fueled future

Marathon Petroleum originally formed MPLX to own and operate logistics assets to support its refining operations. However, the MLP has evolved over the years, shifting its focus more toward natural gas and natural gas liquids (NGL). While its crude oil and products logistics segment remains its biggest earnings contributor (over $4.5 billion last year, compared to nearly $2.5 billion for its natural gas and NGL segment), gas is the company's main growth driver.

Last year, MPLX invested nearly $1.7 billion in growth capital to expand its natural gas and NGL services operations, compared to only $245 million in crude oil and products logistics projects. Additionally, the MLP made over $3 billion in acquisitions last year to further expand its gas infrastructure.

The company plans to invest even more in gas-focused organic growth capital projects this year ($2.2 billion, compared to $200 million in its crude oil and products logistics segment). That elevated investment rate in its gas infrastructure segment should continue. MPLX has major projects underway that should enter commercial service through the end of the decade. It has been capitalizing on surging gas demand to support LNG exports and rising power demand from AI data centers, EVs, and advanced manufacturing.

Oil isn't what fuels MPLX's earnings

Even though MPLX operates significant crude oil infrastructure, it's a volume-based business. Higher oil prices could actually reduce its volumes this year. Meanwhile, the company's growth focus is on natural gas. Given this, MPLX isn't the best energy stock to buy to capitalize on the rise in crude prices. Instead, it's a more durable, income-focused investment (yielding 7%+) with a more gas-fueled growth engine.

Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.