The crude oil tanker Giannis unloads its cargo of Middle Eastern crude at the Motor Oil terminal in Agioi Theodoroi, near Corinth, Greece, on August 24, 2026, following its departure from the United Arab Emirates’ bunkering hub of Fujairah. The tanker is operated by Greece-based Dynacom Tankers Management, a fleet manager whose vessels operate across the Strait of Hormuz and regional transshipment hubs. (Photo by Nicolas Koutsokostas/NurPhoto via Getty Images)
Nurphoto | Nurphoto | Getty Images
As investors search for returns across global markets—from U.S. technology stocks to inflation hedges and energy commodities—a quiet corner of the financial system has quietly delivered the most dramatic gains: maritime freight. The Breakwave Tanker Shipping ETF (BWET), which tracks the cost of shipping crude oil, has surged approximately 3,600% year-to-date as of early September, according to Morningstar data through September 11, making it the best-performing non-leveraged fund in the U.S. This meteoric rise stems from the ongoing U.S.-Iran conflict disrupting tanker traffic through the Strait of Hormuz, transforming a niche investment vehicle into one of Wall Street’s most successful trades.
Supply chains and maritime routes are expected to face additional strain following Iran-backed Houthi rebels seizing control of Yemen’s key seaport of Al-Mocha last week, according to a statement from the group. The port allows the Houthis to disrupt Red Sea shipping lanes, which had previously served as an alternative to the increasingly dangerous Persian Gulf region. Further north, Saudi Arabian officials recently ordered the shutdown of the kingdom’s critical East-West crude oil pipeline as a security precaution after multiple drone attacks originating from Iraq.
John Murillo, Chief Business Officer of B2BROKER, a provider of trading infrastructure technology to financial institutions, emphasized that BWET’s performance reflects the cost of transporting oil rather than fluctuations in oil prices or volumes. “It has very little correlation with crude itself,” he explained. “Investors are essentially wagering on how much it costs to move a barrel from the Middle East to global markets—and right now, that cost has spiked dramatically.”
Compared to the same period last year, freight rates along key Middle Eastern oil shipping routes have increased nearly 500%, according to BWET’s most recent biweekly tanker report released on September 8.
Amid rising tensions, many shipping firms have opted to reroute away from high-risk areas entirely, extending journey times and increasing operational costs. Supertanker charter rates have reached historic highs, driving unprecedented profits for shipping companies.
“This surge explains the fund’s explosive growth—but also highlights its inherent vulnerability,” Murillo noted.
Performance of the Breakwave Tanker Shipping ETF (BWET) over the past one-year period.
Nevertheless, analysts suggest the upside still has room to run. Kyle Peacock, Principal at Peacock Tariff Consulting, a customs and trade advisory firm, points out that the rally isn’t solely driven by geopolitical unrest. Disruptions stemming from tariffs and severe drought conditions affecting major waterways—including the Panama Canal and European ports—have severely constrained vessel availability, creating an acute supply shortage.
“Shippers are accepting quotes that are 300% higher than previous levels because there simply isn’t enough capacity,” Peacock said. “Carriers often need to extend their voyages, yet revenue increases can be tenfold what they were previously.” He added that freight customers are actively competing for limited slots, pushing pricing power firmly into the hands of shipping providers.
Trade policies have further complicated logistics networks. Peacock highlighted a client who relocated its manufacturing operations from China to Hungary to circumvent tariff barriers—a shift that has redirected vessels to less conventional routes, reducing fleet availability in traditional lanes.
“In typical market conditions, liner operators dictate shipping paths. Today, demand is so urgent that routes are being determined by whoever bids the most,” Peacock observed. “Established clients are being displaced by higher-paying freight forwarders. It represents a fundamental reversal in how the industry operates.”
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Peacock noted that normalization will likely take time, particularly as vessels remain trapped in conflict zones or stranded due to drought-related low-water restrictions. While newbuilds are underway globally—with over 200 ships currently under construction—experts estimate it will take between 18 to 36 months before meaningful relief reaches the market.
“Unlike oil or natural gas, where strategic reserves exist, there is no buffer stockpile of ships,” Peacock remarked.
BWET echoed similar concerns in its latest tanker report: “The sharp rise in freight earnings has spurred substantial new orders, bringing the orderbook to historically elevated levels. Although current supply-demand imbalances appear manageable short-term, we anticipate a larger deficit emerging over the longer horizon, signaling the onset of an industry downturn.”
Eric Fullerton, Vice President of Product Marketing at Project44, a supply chain visibility platform, believes such volatility is becoming the norm. “We’ve witnessed two instances in just three years where nation-states or non-state actors have deliberately disrupted international shipping corridors for geopolitical leverage—first through the Suez Canal crisis and now via the Strait of Hormuz and Red Sea attacks,” Fullerton said. “Never before has this occurred with such frequency.”
Before the escalation in the Iran conflict, weekly shipping disruptions typically numbered around 1,000 worldwide. That figure climbed above 9,000 during peak tension periods, per Project44 data, contributing to a cumulative total of 140,276 documented shipping delays throughout the year—an incident being defined as any forced rerouting of a commercial vessel.
While disruption figures have declined somewhat since their peak, they remain significantly elevated compared to pre-war baselines.
“We’re seeing a sustained spike in logistical upheaval,” Fullerton stated. “Geopolitical maneuvering and economic warfare are reshaping supply chains at an unprecedented scale.”
Fullerton warned that continued exploitation of shipping vulnerabilities could prolong elevated costs indefinitely. “These incidents serve as calculated pressure tactics for state and non-state actors seeking leverage in global negotiations. Until there’s structural reform in how international maritime security is enforced, we expect persistent friction in key transit corridors,” he said.
Broader macroeconomic ramifications extend far beyond tanker markets. Rising fuel and logistics expenses continue feeding inflationary pressures across industries dependent on petrochemical inputs and raw materials sourced from the Gulf region.
“Crude derivatives form the backbone of countless everyday products—the packaging, plastics, pharmaceuticals—we rely on. When those supplies get disrupted, everything feels the ripple effect,” Fullerton explained.
Alternative freight-focused funds gain traction
For investors looking to diversify within the sector, Peacock noted that sea transport isn’t the only mode benefiting from current conditions. Air cargo demand remains robust, with August seeing an 18.1% annualized increase in air freight rates, according to the Baltic Air Freight Index—a surprising gain considering historical seasonality usually sees slower activity during summer months.
Those hoping to hedge across both domains may consider the U.S. Global Sea to Sky Cargo ETF (SEA), which allocates roughly 70% to maritime equities and 30% to aviation logistics firms. This blended approach offers investors exposure to shared disruption themes without concentrating solely on tanker futures.
“Air cargo is witnessing similar dynamics,” Peacock confirmed. “Right now, moving freight is far more lucrative than carrying passengers.”
Another diversified play comes in the form of the SonicShares Global Shipping ETF (BOAT), which holds publicly traded shipping companies involved in global maritime transport.
Fullerton cautioned that despite growing interest in logistics plays, stabilizing the global supply network remains a long-term challenge. “Even absent further wars or trade conflicts, lingering risks like port strikes, extreme weather events, or cyber threats can still cause major interruptions,” he said.
“What investors fail to recognize is that today’s challenges aren’t isolated—they compound. A firm trying to sidestep tariffs by relocating production is simultaneously grappling with surcharges from sanctioned waterways, potential labor disputes, and cyber exposure—all interconnected facets of modern trade complexity.”
According to Morningstar data through September 11, neither alternative fund matches BWET’s staggering returns. SEA is up 42% YTD, while BOAT has gained 70%. However, BWET’s concentrated exposure to fewer than ten tanker freight futures contracts—from the Middle East to North America and Asia, as well as West Africa to Europe—carries outsized risk alongside outsized reward.
Trading structures within BWET also impose unique challenges. With an expense ratio of 3.5%, it ranks among the priciest ETFs on the market. Additionally, its classification as a commodities pool subjects it to complex tax treatment, making it better suited for short-term traders than long-haul investors.
Despite these caveats, Murillo urges investors to monitor broader energy market movements closely. “The geopolitical backdrop evolves rapidly. What goes up can come down just as fast. Monitoring diplomatic developments—and positioning accordingly—is essential when playing the tanker trade,” he advised.
