- Global shipping stocks rose due to higher oil transport costs and Middle East tensions
- SonicShares Global Shipping ETF reached an all-time high, with key tanker stocks up
- Oil prices hit two-week highs amid concerns over supply disruptions and geopolitical risks
Global shipping stocks surged on Monday as rising oil transportation costs and escalating geopolitical tensions in the Middle East boosted investor interest in tanker operators. The SonicShares Global Shipping ETF hit a fresh all-time high, while shares of oil and gas shipping companies Torm, Hafnia and Teekay Tankers opened at new 52-week highs.
The SonicShares Global Shipping ETF climbed 2.2% to $54.69. Torm shares rose more than 3%, while Hafnia gained over 2% and Teekay Tankers advanced nearly 2% at the opening bell.
The rally comes as rising costs of transporting crude oil add to the overall price of energy, beyond movements in benchmark Brent and West Texas Intermediate (WTI) futures. Higher freight rates can benefit tanker operators by increasing the revenue they earn for moving oil, although the impact varies depending on vessel availability, routes and contract structures.
As CNBC's Brian Sullivan reported, elevated oil shipping costs amid continued tensions in the Middle East are adding premiums to the overall price of oil on top of benchmark crude prices.
Oil prices climbed on Monday, with both major benchmarks trading at their highest levels in more than two weeks as concerns over supply disruptions intensified. Brent crude rose 2.14% to $106.97 a barrel, while WTI crude gained 2.23% to $93.90.
The gains followed fresh uncertainty over an energy ceasefire between Russia and Ukraine announced by US President Donald Trump. Ukrainian President Volodymyr Zelenskyy said strikes against Russia would continue as Moscow had continued to target energy infrastructure in Ukraine. The proposed ceasefire, announced about a month earlier, had failed to materialise.
The uncertainty has added to concerns about disruptions to energy infrastructure and the movement of crude oil through key shipping routes.
Developments in the Middle East have further heightened concerns for oil markets and shipping companies.
Saudi Arabia said it was responding to fresh drone and cruise missile attacks on Monday, following deadly strikes on Riyadh airport over the weekend. The attacks have raised additional security concerns for the kingdom as regional hostilities continue.
At the same time, attacks on tankers in the Strait of Hormuz have escalated, even as more crude oil has been leaving the Persian Gulf.
The Strait of Hormuz is a critical passage for global energy supplies. Any disruption to tanker movements through the waterway can force shipping companies to reassess routes, security risks and insurance costs, potentially pushing freight rates higher.
For tanker operators, higher transportation rates can translate into stronger earnings when vessels are available to capture the increased rates. However, security threats can also raise operating costs, delay voyages and expose ships and crews to greater risks.
Global benchmark crude prices remain more than 70% higher this year as the war involving Iran continues to affect energy markets.
The latest attacks on Saudi Arabia came about a week after Saudi-led forces in Yemen launched a campaign to retake areas held by Iran-backed Houthi militants, adding another layer of uncertainty to regional security.
Saudi Energy Minister Prince Abdulaziz bin Salman has sought to reassure markets about the kingdom's ability to maintain supplies, reiterating its commitment to energy security and indicating that Saudi Arabia is looking to expand its oil pipeline capacity.
While additional pipeline capacity could offer greater flexibility in moving crude outside vulnerable shipping routes, the immediate outlook for oil transportation remains closely linked to the security situation in the Middle East.
Why Tanker Stocks Are In Focus?
The surge in shipping shares reflects the importance of freight rates in determining tanker operators' earnings. When demand for oil transportation rises faster than available shipping capacity, spot freight rates can increase sharply, benefiting companies with exposure to those markets.
However, higher crude prices do not automatically translate into higher tanker profits. The impact depends on freight-rate movements, fuel and insurance expenses, vessel utilisation, contract terms and the duration of geopolitical disruptions.
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