Hormuz Bottleneck Sends Tanker Freight Rates Soaring
The Strait of Hormuz has become a chokepoint for global trade due to military tensions between the US and Iran, causing an ETF that bets on this disruption to surge. The Breakwave Tanker Shipping ETF (BWET) posted a one-month return of 57.61% as tanker freight rates skyrocketed.
The Baltic Exchange reported a 7.6-fold increase in daily Time Charter Equivalent earnings for Very Large Crude Carriers on the TD3C route, which spans from the Middle East Gulf to China.
Energy ETFs also rallied, with the United States Brent Oil Fund (BNO) rising 18.60% and the State Street Energy Select Sector SPDR ETF (XLE) climbing 9.47%. However, gold and silver ETFs underperformed due to concerns about inflation and interest rate hikes.
Experts predict that if ceasefire negotiations materialize, oil prices will stabilize on a downward trajectory as alternative routes bypassing Middle Eastern producers are established.