The Breakwave Tanker Shipping ETF (BWET) is up roughly 3,600% year-to-date as of early September. The fund is the best-performing non-levered fund in the U.S. as of early September.

Year over year, rates on Middle East oil tanker routes tracked by BWET are up close to 500% as of Sept. 8. The ETF tracks the price of shipping oil rather than underlying crude oil prices. It is the only ETF to track the future cost of transporting crude oil.

In August, Saudi crude supply fell to 6 million barrels per day, the lowest level in more than three decades. This decline occurred partly due to targeting of ships transiting the Bab el-Mandeb Strait by groups linked to Yemen's Houthis. Iran-backed Houthi rebels took control of Yemen's key seaport of Mocka last week. Saudi Arabian officials ordered a shutdown of the kingdom's East-West crude oil pipeline last week after multiple attacks by drones launched from Iraq.

Project44 flagged 140,276 total shipping disruptions this year, defined as when a vessel has to be diverted. Average geopolitical shipping disruptions jumped to over 9,000 per week at the peak of the crisis, compared to around 1,000 per week prior to the war with Iran. BWET stated that the recent rapid increase in freight rates has led to new vessel ordering, with the orderbook now standing at well above average levels.

Why It Matters

The surge in BWET reflects broader disruptions in global energy transport infrastructure. Geopolitical events, including Houthi actions and pipeline shutdowns, are restricting supply and altering shipping routes. The fund's performance is driven by a sharp increase in tanker freight rates due to these geopolitical disruptions.

Shipping disruptions have reached peaks compared to pre-crisis averages. The scale of diversion affects global oil flows, as evidenced by the drop in Saudi crude supply and the closure of key pipelines. These factors combine to elevate the cost of transporting crude oil, directly impacting the metrics tracked by the ETF.

What's New

Year-over-year, rates on the Middle East oil tanker routes tracked by BWET are up close to 500% as of September 8, according to BWET's most recent biweekly tanker report. BWET is the only ETF that tracks the future cost of transporting crude oil, specifically through the TD3C route from Ras Tanura, Saudi Arabia, to Ningbo, China, via the Strait of Hormuz. BWET has seen new vessel ordering, with the orderbook now standing at well above average levels, according to BWET's most recent tanker report.

Prior to the current crisis, average geopolitical shipping disruptions were around 1,000 per week, but this number jumped to over 9,000 at the peak of the crisis, according to Project44. In August, Saudi crude supply fell to 6 million barrels per day, the lowest level in more than three decades, partly due to targeting of ships transiting the Bab el-Mandeb Strait by groups linked to Yemen's Houthis. Saudi Arabia’s East-West pipeline, which bypasses the Strait of Hormuz, was shut down as a precautionary measure after drone attacks, limiting oil flow and increasing reliance on alternative routes.

How Sources Differ

The BWET biweekly tanker report stated that year over year, rates on Middle East oil tanker routes tracked by the Breakwave Tanker Shipping ETF are up close to 500% as of Sept. 8. Lloyd's List stated that the Breakwave Tanker Shipping ETF (BWET) is the only ETF that tracks the future cost of transporting crude oil, specifically through the TD3C route from Ras Tanura, Saudi Arabia, to Ningbo, China, via the Strait of Hormuz.