"BWET is a commodity pool that holds near-dated cash-settled freight futures, weighted roughly 90% to Very Large Crude Carrier (VLCC) contracts and 10% to Suezmax contracts."
"When the Strait of Hormuz closed, vessels were rerouted around longer voyages, effectively shrinking VLCC capacity and pushing spot tanker rates vertical."
"If the strait reopens or a ceasefire takes hold, ton-mile demand collapses, the futures curve flattens, and front-month contracts can lose value faster than the fund can roll out of them."
"Global shipping order books are at a 17-year high, indicating some structural support for tanker rates despite geopolitical risks."
BWET, a commodity pool ETF, primarily holds freight futures linked to VLCC and Suezmax contracts. Its value surged 1,331% due to the closure of the Strait of Hormuz, which disrupted shipping routes and increased tanker rates. Investors view BWET as a measure of geopolitical risks rather than for income. The main risk lies in the potential reopening of the strait, which could drastically reduce demand and negatively impact futures values. Despite this, some structural support exists in global shipping order books.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]