Tanker rates are at extremes. These companies are now turning record profits into high dividends
A supertanker with operating costs of around $10,000 a day now earns over $20 million in operating profit on a single fifty-day voyage from the Gulf of Oman to the Far East. According to brokers' calculations from Clarksons, that's roughly 15% of the market value of a ten-year-old ship, earned in a single voyage. It's not expensive oil behind it, but war-disrupted shipping through Hormuz: oil is transferred from ship to ship off the coast of Oman, tankers wait long at anchorages, and many barrels need two ships instead of one.
Key points
A supertanker now earns over $20 million on a single voyage from the Gulf of Oman to Asia, roughly 15% of the value of a ten-year-old ship. Recently, the largest amount of oil since July passed through Hormuz in a single day.
TORM raised its quarterly dividend year-on-year from $0.40 to $2.40. But it has contracted the third quarter at about a third cheaper than the second.
The annualized yield on tanker stocks from the last quarter exceeds 20%. With dividends from 2025, which was not a crisis year, today's buyer would get only 4% to 6%.
DHT has half of its supertankers on fixed contracts, which the company says cover all costs even if the ships earned nothing on the spot market. It will therefore earn less from further rate increases than its competitors.
Shipowners have ordered over 200 new supertankers this year, more than twice as many as in all of last year. The newest orders have deliveries in 2029 and 2030, when the war premium on rates may be fading.
Shipowners are passing these profits on. Three companies in the sector raised their quarterly dividend year-on-year by five to seven times. Two pay out practically all of their adjusted profit, another 90%. The annualized dividend yield on their shares comes to over 20%.
But the market is starting to split. Rates for the largest crude oil tankers continue to break records, while smaller ships for diesel and gasoline have already contracted the third quarter at about a third cheaper than the second. And recently, the largest amount of oil in almost three months passed through Hormuz in a single day.
The record numbers are already in the books. But dividends will be paid out of future rates.
There are as many ships as last year, but they carry far less
A tanker company does not earn from the price of oil. Its revenue is determined by the daily rate for the ship, expressed in the industry as TCE (time charter equivalent), that is, voyage revenue after deducting fuel and port charges, converted to a daily basis. The rate is pushed up by the ratio between the cargo that needs to be moved and the ships that are currently available. The war between the US and Iran, now in its seventh month, has hit the other side of the equation. The fleet has not shrunk; each ship just carries less per year.
The main cause is shuttle traffic off the coast of Oman. Tankers, often owned by the producers themselves, carry oil through Hormuz, transfer it off Oman onto ships bound for Asia, and return for another load. According to data from Kpler, cited by Reuters, about 2.5 million barrels per day are loaded this way in September, up from 1.4 million in August. That's about 40% of the volume currently flowing through the strait. Added to that are waiting at anchorages, more expensive war insurance, and longer routes, because some Asian refineries are buying oil in the Atlantic.
The result is visible in the price of shipping. Freight from the Persian Gulf to China on a supertanker exceeded $30 per barrel, according to LSEG data, more than a quarter of the price of the oil itself. Before the war it was 2% to 3%.
The second-quarter results capture a calmer phase. The Baltic average daily earnings for VLCC supertankers, which carry about two million barrels, rose from approximately $198,000 in July to about $723,000 by September 18, according to market data. A year ago it was around $80,000.
The second half of the mechanism lies on the cost side. Frontline $FRO, one of the largest owners of crude oil supertankers, estimates the cash breakeven point for its VLCCs over the next 12 months at $23,800 per day, a rate at which the ship covers operations and debt service. Its supertankers on the spot market earned $152,700 per day in the second quarter. Costs barely move with the rate, so most of every extra dollar drops straight to profit.
This is shown most clearly by Danish TORM $TRMD, which operates product tankers for diesel, gasoline, and jet fuel. Its average rate across the fleet rose year-on-year from $26,672 to $59,301 per day, up 122%. Net profit in the same comparison jumped from $59 million to $338 million, up 473%. The rate roughly doubled, profit almost sextupled.
The same leverage works in reverse. When the rate falls, costs remain and profit shrinks faster than revenue. For companies that pay out most of their profit, this hits dividends directly.
The strongest day in Hormuz since July was still only half of pre-war traffic
On Wednesday, September 23, about 60 commercial vessels passed through Hormuz, according to a US official cited by Reuters. About 40 of them coordinated their passage with the US military. They carried out about 22 million barrels of oil through the strait, the most in a single day since early July. Reuters adds that it could not independently verify the figure.
Before the war, about 120 ships a day passed through the strait, according to Lloyd's List. Sixty ships is half of normal traffic, and that was on an exceptional day. The week from September 13 looked different: 22 tankers with 42 million barrels left the strait in the entire week, according to Kpler data. Wednesday managed about half of that week's volume. For the whole of September so far, an average of about 6.5 million barrels per day flows through the strait according to Kpler, the most since a brief recovery after the June ceasefire. The trend is improving, but from a very low base.
Moreover, that single day exceeded the pre-war daily average, which according to CNBC was about 20 million barrels of oil and products. That points to a backlog of ships waiting for escort rather than a restored smooth flow.
The market has seen a similar spike before. In early September, the US military escorted 40 ships with 18 million barrels, a war record at the time. Supertanker rates then did not fall; on the contrary, they soared to record levels in the following two weeks. A one-off convoy does not return the ships stuck in shuttle traffic off Oman to circulation, nor does it shorten waiting at anchorages. And as Clarksons brokers note, shipowners today earn exceptional rates even without entering the strait.
Real change would come from high volumes repeated week after week. Producers would then load directly onto ships bound for Asia, stop needing transshipments, and the fleet would regain the capacity currently consumed by shuttle traffic and waiting. It is the missing capacity that keeps rates up.