Iran-Israel war raises shipping freight rates, logistics sector tracks fuel price impact

Escalating tensions between Iran and Israel have triggered a notable uptick in global shipping and logistics stocks, as concerns over disruptions in the Strait of Hormuz, a critical maritime chokepoint ripple through global markets.

The conflict intensified following reports of Israeli airstrikes on Iranian nuclear facilities, prompting a retaliatory move by the Iranian parliament, which approved a measure to potentially shut down the Strait of Hormuz. The strait, which facilitates the passage of roughly 20% of the world's oil and liquefied natural gas (LNG), is now at the centre of geopolitical and market risk.

In response to the geopolitical flare-up, oil tanker rates have surged. Industry data shows a 12% jump in day rates for tankers in just 24 hours, and a 38% increase over the past week. Petroleum shipping costs have also spiked nearly 52% on a weekly basis, according to shipping analysts.

As a result, shipping companies like Frontline, Teekay, and Scorpio Tankers have seen their stock prices rise significantly. In India, shares of Great Eastern (GE) Shipping and Shipping Corporation of India (SCI) surged by up to 13% on the back of anticipated freight rate gains.