Trump’s peace pledge shows up in oil tanker rates

Frontline

09/01/2025 10:11

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Yawen Chen
       LONDON, Jan 9 (Reuters Breakingviews) - Donald Trump’s
pledges to end the Ukraine and Gaza wars are showing up in
shipping rates. If the U.S. president-elect practices what he
preaches, the impact on transportation groups who have grown
used to the ability to charge top dollar could be profound.
That’s probably why those at the sharp end are already taking a
valuation hit.
    In recent years the shipping industry has been a huge
beneficiary of disrupted trading routes. Take oil tankers. Ever
since Europe banned Russian oil imports after Moscow invaded
Ukraine in February 2022, the continent has increased purchases
from further-away countries such as the United States.
Similarly, Russia has had to turn to Asian buyers to offload its
surplus crude. Meanwhile, Western sanctions on the so-called
“dark fleets” carrying Russian oil have reduced the supply of
ships, and the Gaza war has prompted Iran-aligned Houthis to
block the Suez Canal, forcing many to go the longer route via
Africa instead.
    Those dynamics have increased the so-called “ton-mile
demand” – the volume of products shipped multiplied by the
distances travelled – and this has led to higher tanker rates.
The Baltic Exchange Dirty Tanker index tracking freight rates
from the U.S. to major ports in Europe has risen over 120% since
the Ukraine war. Many oil tanker operators have thus enjoyed a
windfall: Bermuda-based Teekay Tankers  TNK.N , for example, saw
its market value soar nearly sixfold to $2.2 billion between
early 2022 and the middle of 2024.
    In 2025, against a backdrop of weak oil demand, a Trump deal
to cease Russia-Ukraine hostilities could put these dynamics in
reverse. If sanctions on Moscow are lifted, the reintegration of
dark fleets – now making up 23% of large tankers – could add to
an oversupply of new ships expected by 2026, according to
AXSMarine analysts. While most European states will be wary of
taking Russian crude again, at least some could return, reducing
ton-mile demand and freight costs. A group of six publicly
listed tanker operators tracked by Breakingviews, including
Belgium-based CMB.TECH  CMBT.BR  – formerly Euronav – and
Cyprus-based Frontline  FRO.N , have fallen by as much as 17%
since Trump was elected in early November. Teekay Tankers’ value
has fallen back to $1.4 billion.
    The Suez Canal remains a wildcard. Even if Trump delivers a
deal between Israel and Iran-backed Hamas, Tehran’s Yemen-based
Houthi allies might still render it a no-go area. The European
Union is also ramping up sanctions on tankers carrying Russian
oil, and so may the White House under outgoing U.S. President
Joe Biden. Even so, shipping operators are unlikely to find such
rich pickings in 2025 as in previous years.
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    CONTEXT NEWS
    U.S. President Joe Biden’s administration plans to impose
more sanctions on Russia over its war on Ukraine, taking aim at
its oil revenues with action against tankers carrying Russian
crude, Reuters reported on Jan. 6 citing three sources with
knowledge of the matter.
    The European Union has adopted a 15th package of sanctions
against Russia over its invasion of Ukraine, including tougher
measures against more vessels from Moscow’s so-called shadow
fleet, the European Commission said in a statement on Dec. 16.
    President-elect Donald Trump said on Dec. 16 that Ukraine
President Volodymyr Zelenskiy should be prepared to make a deal
with Russian President Vladimir Putin to bring an end to the
nearly three-year-old Ukraine war.
    Trump also said on Dec. 16 he had a “very good talk” with
Israel’s prime minister, Benjamin Netanyahu, about the war in
Gaza and reiterated his threat that “all hell is going to break
out” if Hamas does not release its hostages by Jan. 20, the day
Trump takes office.
    Later, Trump added that if no ceasefire deal is reached by
the time he takes office, “It’s not going to be pleasant.”

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Graphic: Tanker operator shares have fallen since the US
election    https://reut.rs/4a8VCY2
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 (Editing by George Hay and Oliver Taslic)
 ((For previous columns by the author, Reuters customers can
click on  CHEN/ 
yawen.chen@thomsonreuters.com))