The hottest trade of 2026 isn't artificial intelligence. Instead, it's ships carrying oil and fuel as conflicts around the world force longer voyages, allowing takers to charge a premium for their services. The SonicShares Global Shipping (BOAT) ETF is up 35% quarter to date, on pace for its best quarter since its inception in 2021.
Year to date, it's up a whopping 63% — far outpacing other parts of the market, including tech and AI. State Street's Technology Sector SPDR ETF (XLK) is up 3% in Q3 and 36% for the year. Many of the tanker industry's top performers are transporters of oil and refined products: Okeanis Eco Tankers, transporter of crude oil, is up more than 60% this quarter and has more than doubled year to date.
Dorian LPG, which specializes in transporting liquified petroleum gas, is up 58% quarter to date and has more than doubled year to date up over 121%.
Nordic American Tankers, operator of double hull oil tankers, is up 43% quarter to date and has more than doubled, up 131% year to date. "The run up in tanker stocks is related to what's called expanding tonne miles," said Chris Robertson, Deutsche Bank's director of LNG infrastructure and maritime shipping. Simply put, oil and fuel today are traveling farther on less efficient routes.
With ships tied up for longer, fewer are available to carry the next cargo. Robertson traced the tanker market's upswing to three geopolitical disruptions. The most recent is the blockade around the Strait of Hormuz, a key choke point for shipping crude oil and refined products.
The two others include sanctions on Russian crude and refined products following the invasion in Ukraine and Yemeni Houthi attacks on shipping vessels in the Red Sea. Taken together, these geopolitical tensions have been "stretching out the entire supply chain and making things less efficient," Robertson said. Tanker earnings are driven by freight rates, or what customers pay to move oil by ship.
Those rates go up if there's longer routes or disruptions due to security concerns. Ongoing geopolitical conflicts have been the core driver of higher costs for more risk insurance as ship owners demand a premium price to take on the risk of loading cargoes in high-risk areas. "As long as the threat of attack remains in place, rates will continue to be very robust," Robertson said.
He also praised their improving their balance sheets, and "very robust" shareholder return policies. "Many of the publicly listed tanker companies have dramatically improved their balance sheets in paying down their debt," Robertson said. From an earnings perspective, that means there's less interest expense and less debt serviced.
That leaves more cash available for dividends and share repurchases. International Seaways, one of the largest global tanker companies, had 85% of its net income returned to shareholders, for the third consecutive quarter, as of the company's latest earnings report on Aug. 10. While the spot market is near its peak at the moment, that doesn't mean shipping costs could fall quickly.
Robertson said freight costs should remain elevated for the time being even as oil exports from the Middle East recovered from earlier this year. That's because operators may still charge more to enter the region while ship attacks remain a possibility. "There's still risk of attacks on ships" Robertson said.
Therefore, he added, tankers are "still going to demand a higher premium to go into a war region."