Why Smart Investors Prefer Fee-Based Midstream Over Oil Drillers

With West Texas Intermediate crude spiking to $114.58 a barrel in early April 2026 due to an Iran war-related supply shock, traders are piling into upstream drillers like EOG Resources (NYSE:EOG). However, analysts at 24/7 Wall St. warn that this geopolitical premium is temporary and recommend shifting to a fee-based midstream giant.

Recommendation Change

• Stock recommended now: A fee-based midstream company (name not disclosed in source).
• Stock to avoid: EOG Resources (EOG) – due to its dependence on oil price volatility.

Analyst Rationale

Analysts argue that the geopolitical premium driving oil prices higher is temporary and always fades over time. When prices fall, EOG shareholders face steep losses. In contrast, midstream companies that charge fixed fees provide stable cash flows regardless of oil prices, making them a safer investment.

Context

• EOG performance: The stock has risen recently with oil prices but remains vulnerable to volatility.
• Other analyst views: Some analysts prefer midstream companies for steady returns.
• Sector performance: The upstream sector suffers from volatility, while the midstream sector is more stable.

Conclusion

Investors should be cautious about speculating on upstream stocks during geopolitical tensions and focus on companies with stable cash flows, such as fee-based midstream firms.