Strait of Hormuz Tensions Spike Tanker Trade: These 2 Stocks Are Set to Benefit

Summary

During the Iran war, the market’s most reliable winners haven’t been extractors or refiners. Instead, it's the companies that own the tankers setting the market pace, especially those operating Very Large Crude Carriers (VLCCs). VLCCs each haul around 2 million barrels of crude oil per voyage. And, before the conflict began, more than 100 of them would transit the Strait of Hormuz on a normal day. But these are not normal days. The day-to-day updates surrounding the war in Iran are enough to give even the steadiest investor a headache. If you haven’t been following the news closely, sit down, grab a glass of water (and maybe some Dramamine), and dive into the latest recap:Get Frontline alerts:Sign Up July 8: President Trump cancels the ceasefire as the United States strikes 80 Iranian defense targets in response to claimed attacks on commercial shipping vessels. July 9: Iran claims attacks on U.S. bases in Bahrain, Kuwait, and Qatar. July 11: Iran claims the Strait of Hormuz is closed indefinitely. July 12: The United States strikes an additional 140 Iranian targets. July 13: President Trump reinitiates the U.S. blockade and proposes a 20% fee on cargo in exchange for safe passage on tankers transiting Hormuz. July 14: Trump cancels plans to impose 20% toll on Hormuz traffic. July 15: Trump considers expanding operations in Iran, including the seizure of Kharg Island. Got all that? Good, there’s a quiz in 20 minutes before it changes again. For most companies in the energy sector, relentless unpredictability is a recipe for underperformance. But rampant disruption is actually beneficial to shipping tanker companies that can charge higher rates when routes and timelines are uncertain. Rates are measured in tonne-miles, which is cargo multiplied by distance. Longer voyages increase the fees tankers charge clients, which is on top of a hefty war premium. Rates haven’t yet spiked to March levels, but are still elevated and back on the acceleration. VLCCs can have breake...