Strait of Hormuz Shipping Disruptions Drive Oil Tanker Costs to Record Highs
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 23 hours ago
0mins
Should l Buy INSW?
Source: CNBC
- Shipping Costs Surge: Due to the conflict between the U.S. and Iran, shipping through the Strait of Hormuz has been severely disrupted, with Very Large Crude Carriers (VLCC) reaching a record daily rate of $423,736, representing an increase of over 94% from last Friday, directly impacting transportation costs in the global energy market.
- Insurance Coverage Canceled: Major marine insurers have scrapped war risk coverage for vessels operating in the Middle East, leading to increased risks for shipowners navigating the Strait of Hormuz, despite the waterway not being officially closed, which will further exacerbate shipping costs and supply delays.
- Global Energy Prices Rise: With shipping disruptions, global oil and gas prices have significantly increased, expected to create ripple effects in international markets, especially affecting the one-third of seaborne crude oil and 19% of liquefied natural gas flows that transit through the Strait of Hormuz.
- Shipping Companies' Response: Shipping giants, including Maersk, have suspended special cargo acceptance in the UAE, Oman, and other regions, indicating that shipping companies are prioritizing safety amid deteriorating security conditions, which may lead to decreased liquidity in global trade.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy INSW?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on INSW
Wall Street analysts forecast INSW stock price to fall
3 Analyst Rating
2 Buy
1 Hold
0 Sell
Moderate Buy
Current: 76.500
Low
57.00
Averages
58.00
High
60.00
Current: 76.500
Low
57.00
Averages
58.00
High
60.00
About INSW
International Seaways, Inc. is a tanker company engaged in providing energy transportation services for crude oil and petroleum products in international flag markets. The Company operates through two segments: Crude Tankers and Product Carriers. The Crude Tankers segment is made up of a fleet of VLCCs, Suezmaxes, and Aframaxes engaged in the worldwide transportation of crude oil. This segment also includes its Crude Tankers Lightering business through which it provides ship-to-ship (STS) lightering support services and full-service STS lightering to customers in the United States Gulf (USG), United States Pacific, Grand Bahama, and Panama regions. The Product Carriers segment consists of a fleet of MRs, LR1 product carriers, and an LR2 product carrier engaged in the worldwide transportation of refined petroleum products. It owns and operates a fleet of about 84 vessels, including 11 VLCCs, 13 Suezmaxes, five Aframaxes/LR2s, 14 LR1s (including six new buildings), and 41 MR tankers.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Escalating Risks Disrupt Shipping in Strait of Hormuz
- Shipping Suspension: Following U.S. and Israeli strikes on Iran, Maersk has announced a halt to all vessel crossings in the Strait of Hormuz, warning of delays for services to Arabian Gulf ports, which could significantly disrupt global trade flows.
- Oil and Gas Trade Impact: In 2023, oil flows through the Strait of Hormuz averaged 20.9 million barrels per day, accounting for 20% of global petroleum liquids consumption, and any disruption in this route is likely to drive up global energy prices and create supply delays.
- Rising Shipping Costs: With escalating tensions, analysts predict higher container shipping rates in the Middle East, as the industry faces increasing geopolitical risks that compel shipping companies to reassess their operational strategies.
- Enhanced Safety Measures: Companies like Hapag-Lloyd and CMA CGM have suspended all sailings through the Strait of Hormuz and directed vessels to safe areas, reflecting a heightened focus on crew safety and further exacerbating uncertainties in the shipping market.
See More
Strait of Hormuz Shipping Disruptions Drive Oil Tanker Costs to Record Highs
- Shipping Costs Surge: Due to the conflict between the U.S. and Iran, shipping through the Strait of Hormuz has been severely disrupted, with Very Large Crude Carriers (VLCC) reaching a record daily rate of $423,736, representing an increase of over 94% from last Friday, directly impacting transportation costs in the global energy market.
- Insurance Coverage Canceled: Major marine insurers have scrapped war risk coverage for vessels operating in the Middle East, leading to increased risks for shipowners navigating the Strait of Hormuz, despite the waterway not being officially closed, which will further exacerbate shipping costs and supply delays.
- Global Energy Prices Rise: With shipping disruptions, global oil and gas prices have significantly increased, expected to create ripple effects in international markets, especially affecting the one-third of seaborne crude oil and 19% of liquefied natural gas flows that transit through the Strait of Hormuz.
- Shipping Companies' Response: Shipping giants, including Maersk, have suspended special cargo acceptance in the UAE, Oman, and other regions, indicating that shipping companies are prioritizing safety amid deteriorating security conditions, which may lead to decreased liquidity in global trade.
See More
Defense Stocks Rise After U.S.-Israeli Strikes on Iran
- Defense Stocks Surge: Following the joint U.S.-Israeli attack on Iran, defense stocks collectively rose, with Lockheed Martin shares gaining 6%, Northrop Grumman up 5%, and drone manufacturer AeroVironment soaring over 10%, indicating strong market optimism regarding defense spending.
- Oil Prices Spike: The escalation of conflict has led to a significant rise in oil prices, with Brent crude hitting a 52-week high of over $78 on Monday, causing Exxon Mobil and Chevron shares to rise about 4% and ConocoPhillips to gain over 5%, reflecting market concerns over potential disruptions to global crude production and transport.
- Tankers Stocks Perform Well: In response to the military strikes in the Middle East, tanker stocks surged, with Frontline rising over 5%, DHT Holdings up 7%, and International Seaways increasing by 6%, showcasing heightened expectations for tanker transportation demand.
- Travel Stocks Decline: The conflict has caused oil prices to surge, disrupting global travel, leading to declines in travel stocks, with Expedia and Booking Holdings down 3.2% and 2.7%, respectively, Delta Air Lines falling 5.7%, and American Airlines and United Airlines dropping at least 6%, reflecting a pessimistic outlook for the travel industry.
See More
U.S.-Israel Airstrikes on Iran Trigger Market Turmoil
- Middle East Market Decline: Following the U.S. and Israeli airstrikes on Iran, Middle Eastern stock markets faced significant declines on their first trading day, with Saudi Arabia's Tadawul, Oman's Muscat index, and Bahrain's exchange all trading in the red, reflecting investor anxiety over the escalating conflict.
- Oil Price Surge Anticipation: Traders are predicting that Brent crude prices will spike above $80 per barrel due to the airstrikes, despite OPEC's recent decision to increase output, indicating heightened volatility in the global oil market.
- Strait of Hormuz Closure: The closure of the Strait of Hormuz has led global shipping companies to suspend all vessel transit, increasing shipping times and costs, which further exacerbates oil price instability in the wake of retaliatory strikes by Iran's Revolutionary Guard.
- Air Travel Disruption: The airspace across the Middle East has been largely closed since the strikes, resulting in over 1,500 flight cancellations and more than 19,000 global flight delays, placing immense operational pressure on airlines as they work to reopen routes and arrange repatriation flights.
See More
International Seaways Reports Record Quarterly Dividend Amid Strong Earnings
- Record Quarterly Dividend: International Seaways reported a net income of $128 million for Q4, translating to $2.56 per diluted share, with an adjusted net income of $122 million and a total dividend of $2.15 per share, reflecting the company's robust profitability and commitment to shareholder returns.
- Strong Liquidity Position: At the end of the quarter, total liquidity stood at $724 million, including nearly $170 million in cash and $560 million in undrawn revolver capacity, ensuring financial stability amid market fluctuations.
- Ongoing Share Repurchase Program: Management highlighted a $50 million share repurchase program set to continue until the end of 2026, indicating confidence in the company's stock value and enhancing earnings per share through buybacks.
- Optimistic Market Outlook: The expected breakeven rate for 2026 is approximately $14,800 per day, with management expressing optimism about future cash flow generation, suggesting the company can continue to return value to shareholders while effectively navigating market challenges.
See More
International Seaways Declares $2.15 Quarterly Dividend
- Quarterly Dividend Announcement: International Seaways has declared a quarterly dividend of $2.15 per share, payable on March 30, with a record date of March 20 and an ex-dividend date also on March 20, reflecting the company's commitment to shareholder returns amidst oil market volatility.
- Strategic Vessel Management: Amidst fluctuations in the oil market, International Seaways has ensured fundamental stability through effective vessel management strategies, enhancing investor confidence in its long-term growth prospects.
- Earnings Preview: The company is set to release its Q4 2025 earnings report, with market expectations influencing stock price movements, as investors closely monitor its profitability and market performance.
- Asset Disposal Update: Recently, International Seaways sold five tankers, including two VLCCs, for a total of $185 million, a move that not only optimizes its asset structure but also potentially provides funding for future investments.
See More
Escalating Risks Disrupt Shipping in Strait of Hormuz
- Shipping Suspension: Following U.S. and Israeli strikes on Iran, Maersk has announced a halt to all vessel crossings in the Strait of Hormuz, warning of delays for services to Arabian Gulf ports, which could significantly disrupt global trade flows.
- Oil and Gas Trade Impact: In 2023, oil flows through the Strait of Hormuz averaged 20.9 million barrels per day, accounting for 20% of global petroleum liquids consumption, and any disruption in this route is likely to drive up global energy prices and create supply delays.
- Rising Shipping Costs: With escalating tensions, analysts predict higher container shipping rates in the Middle East, as the industry faces increasing geopolitical risks that compel shipping companies to reassess their operational strategies.
- Enhanced Safety Measures: Companies like Hapag-Lloyd and CMA CGM have suspended all sailings through the Strait of Hormuz and directed vessels to safe areas, reflecting a heightened focus on crew safety and further exacerbating uncertainties in the shipping market.
See More
Strait of Hormuz Shipping Disruptions Drive Oil Tanker Costs to Record Highs
- Shipping Costs Surge: Due to the conflict between the U.S. and Iran, shipping through the Strait of Hormuz has been severely disrupted, with Very Large Crude Carriers (VLCC) reaching a record daily rate of $423,736, representing an increase of over 94% from last Friday, directly impacting transportation costs in the global energy market.
- Insurance Coverage Canceled: Major marine insurers have scrapped war risk coverage for vessels operating in the Middle East, leading to increased risks for shipowners navigating the Strait of Hormuz, despite the waterway not being officially closed, which will further exacerbate shipping costs and supply delays.
- Global Energy Prices Rise: With shipping disruptions, global oil and gas prices have significantly increased, expected to create ripple effects in international markets, especially affecting the one-third of seaborne crude oil and 19% of liquefied natural gas flows that transit through the Strait of Hormuz.
- Shipping Companies' Response: Shipping giants, including Maersk, have suspended special cargo acceptance in the UAE, Oman, and other regions, indicating that shipping companies are prioritizing safety amid deteriorating security conditions, which may lead to decreased liquidity in global trade.
See More
Defense Stocks Rise After U.S.-Israeli Strikes on Iran
- Defense Stocks Surge: Following the joint U.S.-Israeli attack on Iran, defense stocks collectively rose, with Lockheed Martin shares gaining 6%, Northrop Grumman up 5%, and drone manufacturer AeroVironment soaring over 10%, indicating strong market optimism regarding defense spending.
- Oil Prices Spike: The escalation of conflict has led to a significant rise in oil prices, with Brent crude hitting a 52-week high of over $78 on Monday, causing Exxon Mobil and Chevron shares to rise about 4% and ConocoPhillips to gain over 5%, reflecting market concerns over potential disruptions to global crude production and transport.
- Tankers Stocks Perform Well: In response to the military strikes in the Middle East, tanker stocks surged, with Frontline rising over 5%, DHT Holdings up 7%, and International Seaways increasing by 6%, showcasing heightened expectations for tanker transportation demand.
- Travel Stocks Decline: The conflict has caused oil prices to surge, disrupting global travel, leading to declines in travel stocks, with Expedia and Booking Holdings down 3.2% and 2.7%, respectively, Delta Air Lines falling 5.7%, and American Airlines and United Airlines dropping at least 6%, reflecting a pessimistic outlook for the travel industry.
See More
U.S.-Israel Airstrikes on Iran Trigger Market Turmoil
- Middle East Market Decline: Following the U.S. and Israeli airstrikes on Iran, Middle Eastern stock markets faced significant declines on their first trading day, with Saudi Arabia's Tadawul, Oman's Muscat index, and Bahrain's exchange all trading in the red, reflecting investor anxiety over the escalating conflict.
- Oil Price Surge Anticipation: Traders are predicting that Brent crude prices will spike above $80 per barrel due to the airstrikes, despite OPEC's recent decision to increase output, indicating heightened volatility in the global oil market.
- Strait of Hormuz Closure: The closure of the Strait of Hormuz has led global shipping companies to suspend all vessel transit, increasing shipping times and costs, which further exacerbates oil price instability in the wake of retaliatory strikes by Iran's Revolutionary Guard.
- Air Travel Disruption: The airspace across the Middle East has been largely closed since the strikes, resulting in over 1,500 flight cancellations and more than 19,000 global flight delays, placing immense operational pressure on airlines as they work to reopen routes and arrange repatriation flights.
See More
International Seaways Reports Record Quarterly Dividend Amid Strong Earnings
- Record Quarterly Dividend: International Seaways reported a net income of $128 million for Q4, translating to $2.56 per diluted share, with an adjusted net income of $122 million and a total dividend of $2.15 per share, reflecting the company's robust profitability and commitment to shareholder returns.
- Strong Liquidity Position: At the end of the quarter, total liquidity stood at $724 million, including nearly $170 million in cash and $560 million in undrawn revolver capacity, ensuring financial stability amid market fluctuations.
- Ongoing Share Repurchase Program: Management highlighted a $50 million share repurchase program set to continue until the end of 2026, indicating confidence in the company's stock value and enhancing earnings per share through buybacks.
- Optimistic Market Outlook: The expected breakeven rate for 2026 is approximately $14,800 per day, with management expressing optimism about future cash flow generation, suggesting the company can continue to return value to shareholders while effectively navigating market challenges.
See More
International Seaways Declares $2.15 Quarterly Dividend
- Quarterly Dividend Announcement: International Seaways has declared a quarterly dividend of $2.15 per share, payable on March 30, with a record date of March 20 and an ex-dividend date also on March 20, reflecting the company's commitment to shareholder returns amidst oil market volatility.
- Strategic Vessel Management: Amidst fluctuations in the oil market, International Seaways has ensured fundamental stability through effective vessel management strategies, enhancing investor confidence in its long-term growth prospects.
- Earnings Preview: The company is set to release its Q4 2025 earnings report, with market expectations influencing stock price movements, as investors closely monitor its profitability and market performance.
- Asset Disposal Update: Recently, International Seaways sold five tankers, including two VLCCs, for a total of $185 million, a move that not only optimizes its asset structure but also potentially provides funding for future investments.
See More
