MLPX and XOP Are Both "Oil ETFs" — And Opposite Bets on Oil

Crude oil has been on a violent ride this year. Brent sat around $91 a barrel in August and has since climbed back toward $100 — up more than $33 over the past year — after crude swung from a 12-month high above $114 in April down to the low $80s in July. The driver is a live supply problem, not a sentiment trade: the Strait of Hormuz, the chokepoint that carries roughly a fifth of the world's oil, has been disrupted; drones have struck Saudi Arabia's East-West pipeline; and the IEA is now flagging a multi-million-barrel supply shortfall with Gulf recovery slipping to 2027.

When oil does that, the default instinct is to reach for an "oil ETF" and ride it. Two tickers show up in nearly every comparison — MLPX and XOP — and at a glance they look interchangeable. Both sit in the energy sector, and both get lumped under the "oil ETF" label — though only XOP is a true oil play, while MLPX is really midstream energy infrastructure — and when crude rises, both go up.

They are not the same bet. That distinction is the entire story, and most head-to-head pieces miss it.

One is a price lever. The other is a toll road.

XOP is the crude-price lever. The SPDR S&P Oil & Gas Exploration & Production fund holds roughly 50 equal-weighted large-cap producers and refiners — ConocoPhillips, Marathon, Phillips 66 — whose earnings are a direct function of what a barrel sells for. The price goes up and their profits, and their stock, go up, often violently; the price comes down and it's the other way around. That is the whole economic model. XOP is, in effect, a diversified bet on the crude price itself, with a modest 1.66% dividend yield bolted on top.

MLPX is a toll road. The Global X MLP & Energy Infrastructure fund holds about 30 midstream companies — Williams, TC Energy, Enbridge, Kinder Morgan, ONEOK — that own the pipelines and storage that move and hold oil, gas, and refined products. Their revenue does not come from the price of a barrel. It comes from the fee they charge to move a barrel through their pipes, under long-term contracts, many with minimum-volume or "take-or-pay" terms. Whether crude trades at $80, $100, or $114, the energy still has to flow, and the pipeline still collects its toll. That fee-based cash flow is what funds a distribution around 4.1% a year — more than double XOP's.

That is the structural difference the "oil ETF" label hides. XOP's cash flow and stock price move with the commodity. MLPX's do not.

The number that flips the story

The trap is that most comparisons show you the last year and stop. Through late May, XOP did indeed lead — up about 38.6% to MLPX's 24.6%. Oil was rising, and the price lever did what a price lever does. Stop there, and the conclusion writes itself: buy XOP.

Stretch the window to five years — a full cycle that includes the 2020 oil crash, the 2022 spike, and the 2023-24 decline — and the picture inverts. A $1,000 invested in MLPX grew to about $2,668. The same $1,000 in XOP grew to about $2,073. The "defensive income" fund beat the "crude play" on total return, and it did so with a peak-to-trough drawdown of roughly -20% instead of -35%.

Let that sit. The fund that looks like the boring laggard paid you more than double the income, held its value better in a crash, and still finished ahead on total return over the full cycle. That is not a rounding error and not luck. It is the toll model doing what it is built to do: decouple your energy exposure from the daily swing of the crude price.

Why the spike is the point, not the premise

Here is where the geopolitics actually matters — and where the XOP bid quietly carries its risk. The current oil price is a premium stacked on top of a normal price, and the premium is the part that's at risk. In my opinion, a disruption that reroutes flow around the Gulf and that the IEA itself expects to recover by 2027 is a tactical shock to barrels in the ground, not a permanent destruction of the world's supply. When flow normalizes, that premium deflates. And XOP is precisely the fund that owns that reversal: the -35%-drawdown fund is the one that falls hardest when the price it levered up comes back down.

MLPX mostly doesn't hold that premium. Its 4% distribution is funded by tolls that keep collecting whether Brent is $80 or $114, and its regulated-investment-company structure and sub-25% MLP cap mean you get the midstream cash flow without the K-1 tax paperwork that a pure-MLP fund drags in. You are not being paid to bet the price stays up. You are being paid to own the infrastructure the energy flows through.

That does not make MLPX risk-free. It still falls in a broad equity selloff, its distribution has been trimmed in a few quarters over the past three years, and it charges a higher fee (0.45%) than XOP (about 0.35%). And it is not the instrument if your specific conviction is that crude is structurally heading higher.

Which one fits

For most portfolios, the clean read is this: MLPX is the default way to own energy — a defensive income sleeve that pays you to hold and doesn't swing with the tape. If you separately believe the oil price stays elevated, a small, deliberate position in XOP is how you express that view, sized the way a speculative satellite should be sized, because the five-year record says it can fall 35% from its high. They are not substitutes. The first is a core holding; the second is a bet.

The condition that would flip this: if the Gulf disruption stops being a flow problem and becomes a genuine, lasting destruction of supply — crude structurally pinned well above $100 for years — then XOP's price leverage becomes worth owning, and the "boring toll fund" starts to look like the one underperforming you. Until the evidence points that way, the structurally sounder read of "the oil ETF" is the one that doesn't care what the price does.