(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

By Yawen Chen

LONDON, Jan 9 (Reuters Breakingviews) - Donald Trump’s pledges to end the Ukraine and Gaza wars are showing up in shipping rates. If the U.S. president-elect practices what he preaches, the impact on transportation groups who have grown used to the ability to charge top dollar could be profound. That’s probably why those at the sharp end are already taking a valuation hit.

In recent years the shipping industry has been a huge beneficiary of disrupted trading routes. Take oil tankers. Ever since Europe banned Russian oil imports after Moscow invaded Ukraine in February 2022, the continent has increased purchases from further-away countries such as the United States. Similarly, Russia has had to turn to Asian buyers to offload its surplus crude. Meanwhile, Western sanctions on the so-called “dark fleets” carrying Russian oil have reduced the supply of ships, and the Gaza war has prompted Iran-aligned Houthis to block the Suez Canal, forcing many to go the longer route via Africa instead.

Those dynamics have increased the so-called “ton-mile demand” – the volume of products shipped multiplied by the distances travelled – and this has led to higher tanker rates. The Baltic Exchange Dirty Tanker index tracking freight rates from the U.S. to major ports in Europe has risen over 120% since the Ukraine war. Many oil tanker operators have thus enjoyed a windfall: Bermuda-based Teekay Tankers , for example, saw its market value soar nearly sixfold to $2.2 billion between early 2022 and the middle of 2024.

In 2025, against a backdrop of weak oil demand, a Trump deal to cease Russia-Ukraine hostilities could put these dynamics in reverse. If sanctions on Moscow are lifted, the reintegration of dark fleets – now making up 23% of large tankers – could add to an oversupply of new ships expected by 2026, according to AXSMarine analysts. While most European states will be wary of taking Russian crude again, at least some could return, reducing ton-mile demand and freight costs. A group of six publicly listed tanker operators tracked by Breakingviews, including Belgium-based CMB.TECH – formerly Euronav – and Cyprus-based Frontline , have fallen by as much as 17% since Trump was elected in early November. Teekay Tankers’ value has fallen back to $1.4 billion.

The Suez Canal remains a wildcard. Even if Trump delivers a deal between Israel and Iran-backed Hamas, Tehran’s Yemen-based Houthi allies might still render it a no-go area. The European Union is also ramping up sanctions on tankers carrying Russian oil, and so may the White House under outgoing U.S. President Joe Biden. Even so, shipping operators are unlikely to find such rich pickings in 2025 as in previous years.

Follow @ywchen1 on X

CONTEXT NEWS

U.S. President Joe Biden’s administration plans to impose more sanctions on Russia over its war on Ukraine, taking aim at its oil revenues with action against tankers carrying Russian crude, Reuters reported on Jan. 6 citing three sources with knowledge of the matter.

The European Union has adopted a 15th package of sanctions against Russia over its invasion of Ukraine, including tougher measures against more vessels from Moscow’s so-called shadow fleet, the European Commission said in a statement on Dec. 16.

President-elect Donald Trump said on Dec. 16 that Ukraine President Volodymyr Zelenskiy should be prepared to make a deal with Russian President Vladimir Putin to bring an end to the nearly three-year-old Ukraine war.

Trump also said on Dec. 16 he had a “very good talk” with Israel’s prime minister, Benjamin Netanyahu, about the war in Gaza and reiterated his threat that “all hell is going to break out” if Hamas does not release its hostages by Jan. 20, the day Trump takes office.

Later, Trump added that if no ceasefire deal is reached by the time he takes office, “It’s not going to be pleasant.”

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic: Tanker operator shares have fallen since the US election

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

(Editing by George Hay and Oliver Taslic)

((For previous columns by the author, Reuters customers can click on yawen.chen@thomsonreuters.com))