Shipping stocks at a crossroads amid their best rally in decades
In this article DAC FRO BWLP SB NMM DAC BWLP FRO SB TNK INSW BWET A months-long crisis in the Strait of Hormuz has turned an overlooked corner of the market into one of 2026's hottest trades, sending shipping stocks to their highest levels in more than a decade.
A basket of 35 U.S.- and European-listed shipping stocks tracked by Lloyd's List Intelligence has climbed about 68% this year, more than five times the S&P 500's gain, and 82% over the past 12 months. Crude-tanker stocks have led the rally, up 120% year-to-date, followed by car carriers, gas carriers and dry-bulk shippers, Lloyd's data show.
"Shipping provides a form of hedge to geopolitical instability," said Andreas Povlsen, managing director at Hayfin Capital Management. He noted that freight markets have benefited from volatility, including the Covid-19 pandemic, Houthi attacks in the Red Sea, and Russia's invasion of Ukraine.
Investors have already been piling into the long-overshadowed maritime sector to gain exposure to downstream commodity supply chains and cash-generative real assets. Then, the Iran war started, resulting in massive disruption to the Strait of Hormuz, once one of the world's busiest oil-shipping lanes.
That has forced tankers onto longer routes and pushed up insurance costs, tightening the effective supply of vessels even as global trade keeps moving. Danaos Corp shares are trading at their highest level since 2008, after a 60% surge this year, according to LSEG data. Container operators Frontline PLC and Teekay Tankers haven't been this expensive since 2011.
BW LPG is at a record. Safe Bulkers and Navios Maritime Partners have notched multiyear peaks, while International Seaways hit an all-time high last week. The Breakwave Tanker Shipping ETF, which trades near-dated crude-tanker forward freight contracts, has surged 650% since the Middle East war began in February and more than 2,300% this year.
"Shipping now has to go further, and tonne-miles have increased," said Nicolas Tirogalas, chief executive officer of Tufton Investment Management, a London-based asset manager focused on the sector, adding that this is boosting demand for oil and chemical tankers, dry-cargo bulkers and gas carriers.
Even "if the Iranian conflict ends, the situation is unlikely to revert to the status quo before the war," Tirogalas said. Once economies find alternative suppliers, they tend not to revert, he said, diversifying instead to manage future disruption risk.
'Fear pricing' Not all of the rally is durable, said John Kartsonas, founder and managing partner of Breakwave Advisors, which runs two shipping ETFs, including BWET. "A meaningful chunk of this premium is just fear pricing, and it'll deflate fast the moment Hormuz looks normal again," he said.
The cycle is about geopolitics and inefficiency — longer routes and stranded vessels — "but not genuine new demand for seaborne trade." Even before the war in the Middle East and its resulting impact on the Strait of Hormuz, tanker and dry-bulk markets were already primed for a strong 2026 after a decade of underinvestment, said J Mintzmyer, founder and president of Value Investor's Edge.
He sees dry bulk as best-positioned if disruptions persist, with vessel supply likely to grow from 2027 through 2030 if rates stay elevated. The Iran war "poured gasoline on the fire of an already strong market," he said.