Freight Tanker ETF Surges 3,600% on Iran Conflict and Supply Chain Disruptions

As investors seek returns across global markets, a niche freight investment tracking oil tanker shipping has emerged as the top performer among non-leveraged funds in the United States. The Breakwave Tanker Shipping ETF (BWET) has climbed approximately 3,600% year-to-date through early September, driven by the escalating U.S.-Iran conflict and severe disruptions to key maritime trade routes.

According to Morningstar data, the fund tracks the cost of shipping oil rather than the price of crude itself. This distinction is critical, as the conflict has severely constrained tanker traffic through the Strait of Hormuz, turning what was once an obscure investment vehicle into one of Wall Street’s most lucrative trades. Additionally, Iran-backed Houthi rebels recently seized control of Yemen’s port of Mokha, further complicating Red Sea shipping, while Saudi Arabia shut down its East-West crude oil pipeline following drone attacks from Iraq.

John Murillo, chief business officer at B2BROKER, emphasized that BWET’s performance is decoupled from oil prices and volumes, relying instead on geopolitical factors. “It has very little to do with the oil price itself or its actual volume and depends mainly on geopolitics,” Murillo said. He noted that rates on the Middle East oil tanker routes tracked by the fund have surged nearly 500% year-over-year, as shipping companies avoid the region due to safety concerns.

Kyle Peacock, principal at Peacock Tariff Consulting, attributed the boom to a combination of war, tariffs, and climate-related issues. Severe droughts have lowered water levels in the Panama Canal and European rivers like the Rhine and Danube, stranding vessels and creating an unprecedented shortage of available ships. “Companies are jumping at prices that might be 300 percent higher than they were paying, but that is the only ship available,” Peacock explained. He added that tariffs have also forced manufacturers to reroute shipments, such as moving production from China to Hungary, which further strains global vessel supply.

The market dynamics have shifted dramatically, with routes now determined by the highest bidder rather than long-standing carrier relationships. Eric Fullerton, vice president of product marketing at supply chain intelligence platform Project44, highlighted that weaponization of trade routes has become a recurring tactic. Project44 reported that geopolitical shipping disruptions peaked at over 9,000 per week during the crisis, up from an average of 1,000 prior to the war. Although disruptions have declined since then, they remain twice the pre-conflict levels.

While the short-term outlook remains favorable for freight rates, long-term risks are emerging. BWET’s latest report noted that record-high rates have spurred a surge in new vessel orders, with the orderbook now well above average. Fullerton predicted it could take one to two years for supply chains to return to normal, citing ongoing military conflicts, trade wars, and potential port strikes.

For investors seeking broader exposure, alternatives include the U.S. Global Sea to Sky Cargo ETF (SEA), which blends sea and air freight holdings, and the SonicShares Global Shipping ETF (BOAT). However, neither matches BWET’s staggering returns. SEA is up 42% year-to-date, while BOAT has gained 70%. BWET remains a concentrated bet on tanker futures, carrying a 3.50% expense ratio and structured as a commodities pool with unique tax implications.

Murillo warned that the current windfall is fragile. With diplomatic signals emerging between Iran and regional neighbors, though no breakthrough with the U.S., the conflict could de-escalate suddenly. “This conflict is unpredictable, and it may end at any time. When it happens, freight rates will go down, and so will the fund,” he said.