Shipping stocks and freight brokers can sail under the radar a lot of time, but much tougher U.S. sanctions on Russian oil may push these types of shares further up the agenda for investors.
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Forward Air (FWRD) rallied 6% at the start of the week before trimming gains, leading the gainers among freight brokers as oil shipping rates surged higher following the moves by the Biden administration to stem the flow of Russian crude to China and India. C.H. Robinson Worldwide (CHRW) and Expeditors International of Washington (EXPD) also rose, while crude oil hit a four-month high.
Refiners in India and China are seeking alternative routes for shipments of crude after the White House targeted 183 vessels in the so-called “shadow fleet” used by Russia to skirt Western sanctions. That has left around a third of the shadow fleet out of action, according to Lloyds List Intelligence.
Meanwhile, Reuters reports freight rates for Very Large Crude Carriers (VLCCs) that can carry two million barrels of crude have jumped by 39% since Friday.
Apparently, Unipec, the trading arm of Sinopec, Asia’s largest refiner, chartered a number of such vessels on Friday.
Around 95% of newly sanctioned ships loaded crude oil and refined products originating from Russia, according to S&P Global. And it notes that these sanctioned vessels delivered 450,000 barrels per day of Russian crude to India in 2024, leaving refiners searching for alternatives.
“Now that the US has identified over 180 vessels and shadow fleets as blocked property designated under sanctions, the availability of tankers capable of transporting Russian oil to India will be reduced too,” said Abhishek Ranjan, South Asia oil research lead at S&P Global Commodity Insights.
Shipping Stocks to Watch
Gains were also noted for shipping stocks, which could benefit from the increased demand.
A.P Moller Mersk (AMKBY), Matson (MATX), Star Bulk Carriers (SBLK), Zim Integrated Shipping Services (ZIM), Global Ship Lease (GSL), and Genco Shipping and Trading (GNK) are among the largest shipping stocks to watch as the sanctions play out and tanker availability tightens.
It is expected that new ships will be pulled into the shadow fleet over the coming months for the first time, further tightening supply in the non-sanctioned freight market, Kpler analyst Matt Wright said in a note.
Which Stocks Are Affected by Russian Oil Sanctions
Investors looking to track different stocks affected by events like the sanctions on Russian oil tankers can look at the TipRanks Compare Stocks tool to analyze performance metrics, assess market trends, and make informed investment decisions.
