On August 24, 2026, the crude oil tanker “Yannis” departed from Fujairah, a refueling hub in the United Arab Emirates, and unloaded its cargo of Middle Eastern crude oil at the motor oil terminal in Agioi Theodoroi, near Corinth, Greece. The tanker is operated by Greece-based Dynacom Tankers Management, a fleet management company whose vessels operate across the Strait of Hormuz and regional transshipment hubs. (Photo by: Nicolas Koutsokostas/NurPhoto, Getty Images)
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As investors around the world seek returns in asset classes as diverse as U.S. AI stocks to inflation hedges to oil contracts, a more mundane entity operating in the shadows of the global economy is reaping the biggest rewards: cargo tankers.
Breakwave Tanker Shipping ETF (BWETThe company, which tracks the price of shipping oil, is up about 3,600% year-to-date as of early September, making it the best-performing non-leveraged fund in the U.S., according to Morningstar data through Sept. 11. That’s because the conflict between the U.S. and Iran has squeezed tanker traffic through the Strait of Hormuz, turning a once-obscure cargo investment into one of Wall Street’s best deals.
Supply chains and shipping routes are likely to be further disrupted after Iran-backed Houthi rebels seized control of Yemen’s key port, Mokka, last week, allowing the militia to wreak havoc on Red Sea shipping. The Red Sea was used as an “alternative” to the dangerous Persian Gulf. Further north on the peninsula, Saudi officials last week ordered the closure of the kingdom’s vital East-West crude oil pipeline as a precaution after multiple attacks by drones launched from Iraq.
John Murillo, chief business officer at B2BROKER, which provides trading infrastructure technology to financial institutions, said the most important detail of BWET is that it tracks the price of transported oil, not the price of transported oil. Basic price of crude oil price.
It is the only ETF that tracks future crude oil transportation costs, giving investors exposure to tanker futures without having to trade directly in the futures market.
“It has very little to do with the price itself or the actual amount of oil, it’s mainly driven by geopolitics,” Murillo said. He said investors who buy the fund are betting on how much it costs to transport barrels from the Middle East to consumers, adding: “Since the Strait of Hormuz crisis started, that shipping has become very expensive.”
According to BWET’s latest biweekly tanker report (September 8), rates for Middle East oil tanker routes tracked by the company have increased by nearly 500% year-over-year.
As hostilities continue, strait crossings continue to be difficult, and new chokepoints emerge, many shipping companies have decided to avoid the region altogether, making trade routes longer and more expensive. Shipping companies are making record profits as supertanker freight rates are at record highs.
“This explains the fund’s significant growth and also points out the risks,” Murillo said.
Breakwave Tanker Shipping ETF (BWET) performance over the past year.
But Kyle Peacock, principal at tariff and customs advisory firm Peacock Tariff Consulting, said the risk of a quick and severe reversal doesn’t seem likely anytime soon. He said it was not just the Iran war that caused this cargo trade boom. Tariffs and widespread drought have disrupted traditional trade routes, while low water levels have hit ports in Panama and Europe, stranding ships and creating an unprecedented shortage of ships.
“Companies are jumping at prices that may be 300 percent higher than what they paid, but that’s the only ship available,” Peacock said. “Shipping companies may have to sail their ships farther, but their revenues are increasing tenfold,” he said, as freight customers who have to move goods compete for very limited space and drive up prices.
Tariffs can also cause ships to be rerouted to destinations that are not normally used. One of Peacock’s customers moved its manufacturing facility from China to Hungary to avoid tariffs. “These new trade routes are taking away the supply of ships,” Peacock said.
In normal cargo shipping times, container shipping companies decide the route, but now, due to market exigencies, the highest bidder decides the route, Peacock said. “Longtime customers are being squeezed out of carriers in favor of the highest bidder,” he said. “It’s at a tipping point, because which trade route is more profitable now depends on how carriers view it…as opposed to the way they did it in the past,” he added.
Mr Peacock said relief would be slow but would come by bringing ships stranded in geopolitical choke points back to port and rescuing ships stranded in low water. And in the long term, the shipping shortage will begin to ease once large numbers of ships are ordered and they are at sea, but that will take 18 to 36 months from now, he said.
“There will always be diesel reserves, there will always be gas reserves, but there will never be a ship reserve,” Peacock said, estimating that more than 200 ships are currently under construction in various countries.
BWET said as much in its latest tanker report, writing: “The recent rapid rise in freight rates has led to significant new ship orders, and the order book is currently well above average levels. While this imbalance in supply and demand is small in the short term, we expect it to result in a significant negative balance in the long term, leading to a downcycle in the industry.”
Eric Fullerton, vice president of product marketing at Project 44, a supply chain intelligence platform, said this type of disruption is becoming the new norm and will continue to drive up shipping costs for the foreseeable future. “This is the second time in the last three years that a government or group has weaponized a trade route for geopolitical gain. We have never seen this before,” Fullerton said, referring to the initial disruption in the Suez Canal and now the Strait of Hormuz, and last week’s renewed Houthi attacks on key Red Sea shipping routes.
According to Project 44, before the war with Iran, the average geopolitical transportation disruption was around 1,000 per week, but that number soared to more than 9,000 at the peak of the crisis. This year, Project 44 reported a total of 140,276 transportation disruptions, defined as cases in which ships had to be diverted.
Although the turmoil is gradually decreasing, it is still twice as high as it was before the outbreak of the Iran war.
“We’re concerned about an incredible amount of disruption,” Fullerton said, citing military conflicts and trade wars. “This has changed the way we operate,” he added.
Given the success of this strategy, he predicts that arms trade will continue. “These are very strategic negotiating tactics for these groups and countries, so the concern is that governments and groups will continue to target supply chains to increase their bargaining power against geopolitical events,” Fullerton said.
As inflation around the world shows, the impact on the global economy goes far beyond tanker trade, which supplies petrochemicals and raw materials to the global economy. “The raw material is the packaging. What comes from the Gulf is the raw material to make things, a lot of raw materials, not necessarily the final product,” Fullerton said.
More Cargo ETF Trading Options
Mr Peacock said sea freight was not the only mode of freight transport currently benefiting, with air freight commanding a higher premium. According to the Baltic Air Cargo Index, airfares rose 18.1% in August compared to the same month last year, a notable increase given that August is typically a slow season for air cargo.
For investors looking for a way to test both trends at the same time, consider the US Global Sea to Sky Cargo ETF (sea) has split its holdings around 70% between shipping companies and 30% between air cargo companies, giving it broad exposure to the same disruptions that drive BWET’s profits without the concentration risks associated with betting on tanker futures outright.
“A lot of air cargo is in a similar situation…cargo is currently more profitable than passenger,” Peacock said.
There is also more diversified trading in ocean shipping through the SonicShares Global Shipping ETF (boat) invests in the stocks of companies operating in the global shipping industry.
Fullerton expects it will take one to two years for the supply chain to return to something close to normal. Unless normal shipping delays such as port strikes, extreme weather, or cyber attacks are exacerbated by war or tariffs, things will return to normal.
“Companies that manage tariff exposure through nearshoring are also managing freight rate fluctuations from Hormuz and are exposed to the next port labor dispute. This is a cumulative story, not a single event,” Fullerton said.
But with SEA’s year-to-date return of 42% and BOAT’s 70% year-to-date return, according to Morningstar data through Sept. 11, no cargo fund trades come close to the narrow range of oil tanker futures that BWET bet on.
That’s about as narrow as a leveraged single-stock ETF can trade, with exposure to fewer than 10 futures contracts held on tanker shipping routes from the Middle East to the Americas to Asia, and from West Africa to Europe. Also, BWET’s expense ratio is not cheap at 3.50%. It also uses an investment structure known as a commodity pool, which is designed for futures trading but has unique tax considerations, making the Fund more suitable for tactical traders than long-term investors.
But Murillo said investors would be wise to keep in mind the underlying global dynamics fueling oil tanker futures, as geopolitical conditions can change quickly and cargo markets are notoriously volatile. Restrictions on shipping routes, shortages of ships, and war-related increases in premiums and insurance all prove to be short-term in nature. Although signs of some diplomatic progress between Iran and its Middle Eastern neighbors emerged over the weekend, progress between the United States and Iran toward lessening hostilities on a key oil shipping route remains elusive. “This conflict is unpredictable and we don’t know when it will end. If it does, fares will go down and funds will go down,” he said.
