Energy Market Outlook: Midstream Resilience & the Nuclear Renaissance

Volatility has defined energy markets throughout 2026, as oil prices and equities respond to geopolitical turmoil and shifting global supply expectations.

While the year began with a bearish consensus forecast for oil prices in the high $50s, escalating tensions in the Middle East have pushed crude significantly higher. However, despite this choppiness, energy has quietly led the equity market as the best-performing sector in the S&P 500.

“Energy is the best performing sector in the S&P 500 today. It’s up just over 30% on a total return basis,” Stacey Morris, head of energy research at VettaFi, said during VettaFi’s Q2 Market Outlook Symposium on April 30, adding that the sector was already up about 25% before the Iran war began.

Key Takeaways

• Energy has emerged as the top-performing S&P 500 sector this year, delivering a total return of over 30% as oil prices have skyrocketed..
• Midstream companies and MLPs offer a high-yield defensive play, benefiting from record-high U.S. and Canadian export demand.
• Global energy security concerns are driving a massive nuclear renaissance and a focus on diversified power sources, including coal.

Midstream Companies and MLPs Outpace Volatility in Energy Markets

Oil prices saw their biggest surge after the Iran conflict. In particular, there was the effective closure of a key strait that handles roughly 20% of global petroleum flows. There is limited visibility into regional infrastructure damage and export disruptions from Qatar affecting liquefied natural gas (LNG) and natural gas liquids (NGLs). Morris expects “things are going to continue to be choppy” and oil to remain “driven by headlines.”

Longer term, Morris expects to be in a higher for longer oil price environment. She pointed out that the WTI futures curve for 2027–2028 has shifted from under $60 per barrel at the start of the year to closer to $70. Currently, conflict has disrupted roughly 12–15 million barrels per day of oil, refined products, and NGLs.

With depleting inventories and a stronger price outlook, the U.S. Energy Information Administration now forecasts U.S. oil production rising by 400,000 barrels per day in 2027 to nearly 14 million barrels per day. This is a record level, versus a prior forecast for a 300,000-barrel decline.

Against this backdrop, Morris expects the U.S. and Canada to likely become the preferred energy suppliers to the world. U.S. exports off the Gulf Coast are well suited for Europe. Meanwhile, Canadian exports from the West Coast enjoy proximity to Asia.

Additionally, this trend directly benefits midstream corporations and MLPs. These are companies operating pipelines, processing plants, and export facilities, and are not as exposed to commodity price swings. Furthermore, with MLPs yielding just under 7% and broader midstream around 4.7%, Morris sees the space as “an interesting way to play a long term theme” of rising North American production and exports.

Investors can access this space through the Alerian MLP ETF (AMLP) or the broader Alerian Energy Infrastructure ETF (ENFR).

The Nuclear and Baseload Power Shift

Energy security has also re-emerged as national security. Morris pointed to a clear nuclear renaissance, with over 30 countries signing a declaration to triple nuclear energy by 2050. This shift is captured by the Range Nuclear Renaissance Index ETF (NUKZ).

Furthermore, nuclear’s appeal lies in its resilience. Uranium can be stored on-site for years, and plants are refueled only every 18–24 months. This makes them much more insulated from the kinds of gas disruptions seen in recent crises.

Meanwhile, coal remains a critical, if controversial, baseload source as some Asian economies pivot away from expensive LNG today. The Range Global Coal Index ETF (COAL) reflects this continued reliance on traditional fuel sources

With global power demand accelerating the takeaway for investors is clear. “You’re going to need a lot of different types of power and a lot of different suppliers of energy,” Morris said, reinforcing the case for diversified exposure across the energy value chain.