$800,000-a-day tankers: Are shipping stocks cheap or just cyclical?

Shipping industry executives and global media reports highlight that spot freight rates in the key tanker segment, very large crude carrier (VLCC), that are used to transport crude oil from the Middle Eastern countries to key consuming countries in China and India have jumped more than four-fold over the past weeks.

For instance, in the VLCC segment, spot freight rates from the Middle East to key oil consuming countries like China and India are being quoted at $ 700,000 to $ 800,000 per day, over the past few weeks.

VLCC spot freight rates had averaged $ 137,000 per day in the first quarter of FY27 as compared to $ 42,065 per day a year earlier, a rise of nearly 226% y-o-y, according to industry data from a leading Indian shipping company.

The Hormuz Chokepoint: How Extended Blockades Are Rewriting Journey Times

The sharp jump in spot freight rates has once again been attributed to the intensification of the conflict in the Middle East, with both the US and Iran reengaging in bombing in the region.

Also, with the Strait of Hormuz practically shut for ships for more than 10 days, the journey time has increased for ships transporting crude oil from the Middle East to consuming countries. And the risk for the crew of VLCC also remains elevated.

Shipping executives also pointed out that nearly 20% of VLCC capacity globally is more than 20 years old and not permitted to sail, and also contributing to higher spot freight rates in this segment.

For transporting crude oil from producers outside the Middle East to consuming countries, spot freight rates in VLCC have reached close to $300,000 per day.  

Suezmax Rates Surge to $300,000 for European Routes

In other tanker segments, like Suezmax, spot freight rates from the Middle East to oil consuming countries in southern Europe are being quoted at $ 275,000 – $ 300,000 per day, point out shipping industry executives.

Spot freight rates in the Suezmax had averaged $ 140,300 per day in the first quarter of FY27 as compared to $ 46,000 per day, a year earlier.

Let’s look at tanker freight rates during other conflicts / wars over the past few years.

The Russia-Ukraine Shock: How VLCC Rates Climbed From Negative to $84,000

The Russia – Ukraine war started in February 2022, and the world was still dealing with the impact of the Corona crisis.

Tanker freight rates were abysmally low, given very low level of global economic activity. For instance, average spot freight rates in the VLCC segment were negative $ 3,130 per day in February 2022, as demand for transporting petroleum products long distance was virtually non-existent — from Middle East to large consuming countries like China.

In other tanker segments, like Suezmax, spot freight rates averaged $ 18,000 per day in February 2022, with demand for vessels for transporting crude oil for shorter distances – from Middle East to southern Europe.

Tracking the Post-Covid V-Shaped Rate Recovery

However, by August 2022, as global economy activity showed signs of recovery, it helped VLCC rates to gradually recover. Also, shipping routes had lengthened, given the Russia – Ukraine conflict. The average spot freight rate in tanker segment like VLCC had recovered to $ 34,100 per day in August 2022 as compared to $ 319 per day a year earlier.

And with growing fears of shortage of fuel in key consumer markets in China and India amidst the Russia-Ukraine crisis, VLCC spot average freight rates had touched $ 84,660 per day in November 2022 as compared to $ 5,450 per day a year earlier. 

Spot freight rates in Suezmax had also averaged $ 84,600 per day in November 2022 as compared to $ 9,200 a day a year earlier.

The $60 Price Cap Ripple Effect: Navigating EU Sanctions on Russian Oil

However, with the US and European Union sanctioning the purchase of Russian oil and placing an upper limit of $ 60 per barrel on oil supplied from Russia, it had a ripple effect on spot tanker freight rates.

Spot average freight rates in VLCC segment were $ 45,200 per day in October 2023 as compared to $ 66,900 per day a year earlier.  

 The above trend in freight rates continued during calendar year 2024 –   for instance, in September 2024, prior to start of peak winter season for oil, average spot freight rate in VLCC segment was $ 37,000 per day.   

Middle East Blockades: The Catalyst Behind the 226% Rate Jump

The commencement of the Israel – Palestine war in October 2025 with intense bombing in the region and fears of disruption of oil supplies in key consuming nations in the winter season resulted in skyrocketing freight rates in the tanker segment.

For instance, average spot freight rates in VLCC segment were $ 90,240 per day in October 2025 as compared to $ 44, 400 per day in August 2025.  

In Suezmax segment, average spot freight rates were $ 68, 200 per day in October, 2025 as compared to $ 57,780 per day in August, 2025.

The surge in tanker freight rates has continued strongly during calendar year 2026.

Tanker Freight Rates: Then vs Now

Tanker Segment	Earlier Rate	1QFY27 Average	Latest / Current Rate
VLCC	$42,065 per day in 1QFY26	$137,000 per day, up nearly 226% YoY	$700,000–$800,000 per day over the past few weeks
Suezmax	$46,000 per day in 1QFY26	$140,300 per day	$275,000–$300,000 per day over the past few weeks

Fleet Allocation: How Indian Firms Are Capturing the 70% Tanker Upside

Indian shipping companies typically have 70% of their total fleet capacity dedicated to the tanker segment for transporting crude oil and other products. Shipping companies utilise a combination of short and long-term contracts with their customers to maximize their earnings.

Great Eastern Shipping Company’s total owned tonnage was 3.24 million dead weight tonne (dwt) in the June 2026 quarter as compared to 3.04 million dwt a year earlier.

Capital Efficiency Face-Off: G E Shipping vs. SCI (15.9% vs. 15% RoE)

G E Shipping Company had a consolidated Return on Equity (RoE) of 15.9%, according to data from Screener.in.

Shipping Corporation of India had a RoE of 15%.

Return on Equity – the most efficient sails ahead

Shipping company	Return on Equity (in %)
Great Eastern Shipping  Company (consolidated)	15.9%
Shipping Corporation of India (consolidated)	15%

Dalal Street Strategy: Evaluating the ₹900 Crore G E Shipping Buy-Back

The G E Shipping Company stock ended 0.8% higher at Rs 1,411 on Friday.  The stock had hit a 52-week high of Rs 1,798 on 19 May, 2026.

The board of G E Shipping Company had recently approved the buy-back of shares at a price not exceeding Rs 1,530 per equity shares and for an amount not exceeding Rs 900 crore.  At the buy-back price, the stock is valued at a P/E of nearly 5.9 times.

Over the past 5 years, the stock has traded at a P/E between 3.9 times and 31.8 times, according to Screener.in.

No doubt, the shipping industry is expected to benefit from the current surge in the key tanker segment over the past few weeks.

Volatility and Value Traps: The Risks of Banking on Long-Term Contracts

However, spot shipping freight rates tend to be quite volatile, and the shipping industry reacts almost instantly to big / significant changes in the global economy. Readers need to take into consideration that any resolution / possible solution to the Middle East crisis, going forward, could result in freight rates crashing.

In such a scenario, shipping companies like G E Shipping Company will depend on long-term contracts to minimize any fall in spot freight rates. If the Middle East crisis continues, spot shipping freight rates can continue to remain strong, going forward.

Dalal Street Strategy: Weighing the Cyclical Risks of the Buy-Back Offer

Readers could consider tendering a portion / some of their shares in the buy-back, given the inherent cyclical nature of the shipping industry. Having said that, it’s always a good idea to consult your personal advisor / chartered accountant before taking any decision. 

The P/E Illusion: Why a 5.3x Valuation Might Be a Cyclical Value Trap

G E Shipping Company trades at a consolidated P/E of 5.3 times. Over the past 5 years, the stock has traded at s P/E between 3.9 times and 31.8 times, according to Screener.in.

G E Shipping Company v/s Shipping Corporation of India valuations

Shipping company	Consolidated P/E
Great Eastern Shipping Company (consolidated)	5.3 times
Shipping Corporation of India (consolidated)	8.1 times

Shipping Corporation of India trades at a consolidated P/E of 8.3 times. Over the past 5 years, the stock has traded at a P/E between 3.9 times and 23.7 times.

Spot shipping freight rates tend to be quite volatile, and readers need to take into consideration that a low P/E in the shipping industry does not necessarily mean a ‘value’ buy. The shipping industry reacts almost instantly to big / significant changes in the global economy.

Readers could put both these shipping stocks to their watch list of stocks for 2026 , and see if their performance matches expectations.

Disclaimer:

Amriteshwar Mathur is a financial journalist with over 20 years of experience.

Disclosure: The writer and his family have no shareholding in any of the stocks mentioned in the article.

The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.