The Iran MOU indeed seems to be over, as the strikes are continuing, with the Strait of Hormuz not really operating. A rather niche shipping ETF, the Breakwave Tanker Shipping ETF (NYSEARCA:BWET), has benefited significantly from this and could surge even more if it continues. We’ll get into that a little later.
Earlier this month, Trump declared the ceasefire “over,” and things have only been escalating since. Per Trump, the U.S. could hit Iran’s civilian infrastructure heavily starting next week. This will certainly make oil prices jump more.
All things considered, the situation looks bleak for peace. And while that is terrible for inflation prospects and the broader economy, some ETFs can surge.
Why the BWET ETF benefits
BWET is the first U.S.-listed crude tanker shipping ETF. It tracks the daily price movements of indices that reflect the cost of transporting crude oil by sea. It holds crude tanker freight futures directly through contracts tied to Very Large Crude Carriers (VLCCs), with some Suezmax exposure.
You get exposure to oil tanker freight rates, and it was initially ignored as a tiny niche ETF but surged after the Strait of Hormuz closed. With the chokepoint disrupted, cargoes were rerouted onto longer, more capacity-intensive voyages, and rates spiked. It’s a purer geopolitical-volatility play than oil itself, since shipping is being choked right now and targeted constantly in and around the strait.
Why BWET could surge even more
The Strait of Hormuz is operating in conflict, and the recent re-acceleration could lead to a re-energized rally. It depends on how long the current relapse of the conflict lasts, but the future of a ceasefire is unknown. Moreover, the Red Sea may also be closed if this keeps escalating, which could send shipping costs soaring as more ships would have to reroute all the way around Africa.
On top of that, Ukraine is now routinely hitting Russian ships in the Black Sea. Russian “shadow fleet” tankers carried oil to third-party destinations in countries such as India, where it was refined and then resold to Western countries without being hit by sanctions. If this shadow fleet is damaged, oil prices will climb higher.
It will be worse if major insurers cancel war coverage again. However, it’s no longer just an insurance or cost issue. S&P Global’s Rahul Kapoor said ships are still avoiding transits to ensure the safety of the crew, cargo, and the vessel.
How you should play the BWET ETF now
The BWET ETF should be a highly opportunistic play on current events, not something you should buy and hold forever. The ceasefire-war-ceasefire loop has been erratic, and it is not possible for a regular investor to predict where things will go in the coming weeks. Thus, I wouldn’t put significant amounts into it.
Even if the worst-case scenario were to happen, BWET may spike another 50-100%. Still, I wouldn’t expect this to last for too long. If oil prices get too high and uncomfortable, this will likely prompt the Trump administration to find an exit. On the other hand, if there is a solid ceasefire and it comes in earlier than expected, tanker rates can fall significantly and leave you at a loss.
BWET is already up 1,900%, so the best opportunity to buy this is already behind you.
It still makes sense to have a small position here, since we could see a couple more weeks of combat. There’s a lack of reports about any side pursuing a ceasefire, and trust is low. And if broader strikes on Iranian infrastructure do go through, it may indeed lead to a surge.
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