Shares of the oil tanker operator, which owns 22 Very Large Crude Carrier supertankers (VLCCs), gained as much as 18% in September through Friday's close. DHT is giving back some of those gains today -- down 3% through 10:20 a.m. But why was DHT stock up in the first place?
This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia.
Continue » Tanker rates are the reason. As StreetInsider.com reports, the cost of chartering a Very Large Crude Carrier (VLCC) supertanker passed $1 million per day yesterday. That's up 5 times from what chartering a supertanker cost before the Iran war began Feb. 28.
The Baltic Dirty Tanker Index (BAID) doesn't show precise dollar rates; instead, it uses a "point" system similar to the Dow Jones Industrial Average. Still, the BAID illustrates the change. The index closed just below 2,000 before the war, hit 2,421 at the beginning of September -- and has gone straight up this month, more than doubling to 5,092.
StreetInsider attributes the rate spike to "a near-shutdown of Hormuz traffic" that is slowing tanker traffic and making it hard to charter VLCCs. So what's changed about this that would cause DHT stock to slip today? reports that Iran offered over the weekend to reopen the Strait of Hormuz "within seven days" if the United States Navy lifts its blockade of Iranian shipping. What does this mean for tanker charter rates and for DHT?
This isn't the first time rumors that the Iran war is about to end have pushed oil stock prices lower. It might happen this time -- or it might not. If it doesn't, you can expect charter rates -- and DHT stock -- to go right back up again.
Extract — continue reading at the source.
