What makes markets so interesting — and maddening — is that they tend to behave in ways you didn’t expect.
Take crude-tanker shipping. In October 2019, the threat to oil exports from the Middle East pushed spot freight rates to $190,000 per day. The supply-demand balance is even tighter now, and Middle East crude flows are once again theoretically under threat, so rates and tanker stock pricing should shoot up again, right?
In fact, rates have held relatively steady and stock prices are down.
The U.S. killed Iranian general Qassem Suleimani on Jan. 2. Iran retailed with airstrikes on Iraqi bases housing Americans on Jan. 7. If markets followed the pattern seen in the second half of last year, oil shippers would have bid up spot rates as they sought to secure cargoes as a hedge against possible military action in and around the Strait of Hormuz.
They haven’t, at least not yet. According to Clarksons Platou Securities, rates for very large crude carriers (VLCCs, tankers that carry 2 million barrels of crude each) averaged $84,800 per day on Jan. 13, down 9% week-on-week. On Jan. 2, rates averaged $101,400 per day.
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