Why the price of this one exchange-traded fund has suddenly gone exponential

By Jules Rimmer

The Breakwave Shipping Tanker ETF has risen more than fifty-fold in 2026 already

The shipping slump of 2022 led to a slowdown in new VLCC orders, now resulting in fewer deliveries four years later.

The Breakwave Tanker Shipping exchange-traded fund started 2026 with an $18 handle. On Thursday this ETF closed New York trading north of $1,000, and it's rallied by a third in little in just two weeks.

This exponential move is explained by the record-breaking tanker rates resulting from disruptions to energy shipments in the Strait of Hormuz over the last six months.

The Breakwave Tanker Shipping ETF BWET does not hold any physical oil or even shares in shipping companies. Instead, it holds positions in wet freight futures contracts such as those traded on the Intercontinental Exchange, the Chicago Mercantile Exchange and the New York Mercantile Exchange. It's worth noting that this ETF only moves in response to oil-transport costs, not the price of oil itself, even if there is clearly some kind of relationship between the two.

This explains why, for instance, the Breakwave ETF has increased by fifty five times this year whereas Brent (BRN00) has risen by 69% and the State Street Energy Select Sector SPDR ETF XLE, that tracks the share prices of companies in the energy sector, is 42% higher. These futures contracts are no longer the preserve of companies directly involved in the industry itself. Financial firms are using the contracts to hedge their portfolios from energy price risks and inflation.

In fact, within the crude oil shipping market, the Breakwave ETF has an even more concentrated exposure. Roughly 90% of the ETF's contracts are tied to a route connecting China with the Middle East, according to Alejandro Garza, founder and chief executive of Aztlan Equity Management, in an article in Axis Business.

A note published by ING economist Rico Luman on Wednesday highlighted the surge in crude tanker rates that has been triggered by the geopolitical turmoil in the Middle East.

Crude tanker rates have soared, pushing up transport costs

Not only have tankers been targeted in the shipping lanes of Hormuz, the Gulf of Aden and the Bab al-Mandeb, but insurance costs have spiked, various sanction regimes have reduced the supply of available vessels and deliveries of new crude carriers slowed sharply after the chaos generated by the start of the Russo-Ukrainian war in 2022.

To avoid the threat of attack in Hormuz, Luman points out that shipping routes have been reorganized, often involving much longer journeys while the expansion of Russia's shadow fleet - designed to circumnavigate sanctions - has reduced the availability of compliant vessels.

To put some numbers on the unprecedented jump in shipping costs, Luman writes that average global crude vessel earnings exceeded $500,000 daily in the first week of October. That's ten times the 2025 average. For the VLCCs (or very large crude carriers that transport up to 2 million barrels of capacity) the rates have gone beyond that.

To illustrate the impact on oil prices, Luman compares the cost of shipping crude from Saudi Arabia to Rotterdam last year, which translated to roughly $2 per barrel, to this year where it's reflecting about $35 for every barrel. With much higher cracking spreads at refineries (the profit made by turning crude oil into diesel) this adds about $0.50 to every liter of diesel at the pump.

Headlines in September proclaimed oil transit through the Strait of Hormuz had returned to pre-war levels but it seems shipping costs have reacted immediately this week to news of a fresh wave of attacks on Gulf producers and their vessels.

Rising insurance costs and tightness in the supply of vessels means it's not just wet freight costs that are booming. Even the Breakwave Dry Bulk Shipping ETF BDRY, dealing in futures related to grain and other dry cargo shipments, has seen its price jump 71% so far in 2026.

-Jules Rimmer

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10-09-26 0512ET