Shipping fallout from Red Sea crisis spreads to product tankers

Freight fallout began with container ships. It is now significantly impacting product tankers - the vessels that transport gasoline, diesel, jet fuel, naphtha and other petroleum products.

Larger product tankers that do long-haul runs are diverting around Africa in increasing numbers.

We are now definitively seeing upward pressure on both mid-sized crude tanker and long-range and medium-range product tanker rates.

The Red Sea crisis has pushed up stocks of U.S.-listed product tanker owners, yet these equities have not risen to the same extent as freight rates.

"In the equity market, valuation does not reflect recent rate improvements or the prospect of a stronger market in 2024," wrote Mørkedal on Mon. "We believe that product tanker equities offer excellent risk/reward because little of the ongoing strength has been priced in."

These stocks have more to run.