Best Oil Tanker Stocks

Oil tankers are ships designed for transporting bulk oil and/or its derivative products. Tanker ships can be either crude tankers that transport unrefined crude oil or product tankers that transport refined products from refineries to consumer markets. Oil tanker stocks provide investors access to companies that own, operate and/or lease different types of oil tankers and supporting facilities.

Global oil demand decreased from 60 to 70 million barrels per day (BPD) to 30 million BPD due to the COVID-19 pandemic. Despite that, oil tanker companies saw increased interest in services during the pandemic because oil producers relied on these companies to store oil in the tankers until the oil market improved. Oil sales have since increased somewhat, prompting the rental price for oil tankers to fall from a high of up to $200,000 per day during the pandemic to more normal levels of $25,000 to $40,000 per day.

Benzinga’s picks for the best oil tanker stocks include those of the largest oil tanker shipping companies in the world. These companies’ stocks trade on major U.S. exchanges, such as the New York Stock Exchange (NYSE) and the Nasdaq Exchange (NASDAQ). 

Quick Look at the Best Oil Tanker Stocks

• Frontline
• DHT Holdings
• Nordic American Tanker Ltd
• Euronav
• Teekay Corp

Overview

Crude oil transportation began in the 1860s when the commodity had to be transported from its source to refineries. Product movement was generally accomplished via the railway system and later through iron and steel pipelines. 

Tanker trucks were more widely used by the 1940s, but oil tanker ships began to dominate the oil transport market as the oil industry expanded and oil was imported from other countries. Full-sized oil tankers can transport a large amount of crude and petroleum products for a very low cost per barrel and are basically the only practical way to transport crude oil across oceans. 

While oil tankers provide the oil industry with transportation and storage capacity, oil tankers carry risk, as evidenced by the massive Exxon Valdez oil spill in 1989 that caused notable environmental harm. The Exxon Valdez ran aground in Prince William Sound and released nearly 11 million gallons of crude oil into the nearby waters that then spread some 1,300 miles along the Alaskan coast. 

The oil tanker business can also see fluctuating demand for its services due to the notable price changes seen in the associated crude oil market. Also, the likelihood that demand for oil will decline as electric vehicle sales rise means that buying oil tanker stocks may not be an optimal choice for long-term investors, although short-term traders who keep a sharp eye on oil prices could do well trading these stocks. 

Income investors who prefer to put their money into dividend stocks could also benefit from owning these stocks. Depending on market forces, however, they may not achieve significant capital appreciation in the price of their oil tanker stock holdings and might even see the price of those stocks decline.   

Best Online Brokers for Oil Tanker Stocks

Benzinga’s selected oil tanker stocks all trade on major U.S. exchanges, so you can trade them through any stock broker providing access to those markets. Most major U.S. brokers will also execute commission-free orders in these stocks. The table below provides a comparison of online brokers you can use to trade these stocks. 

Features to Look for in Oil Tanker Stocks

1. Fleet Size: The number and size of oil shipping vessels and the types of products transported have a direct bearing on the bottom line of each oil tanker company. Also important are the maintenance costs and potential liabilities the company might incur if the ships are inactive or fall into a state of disrepair. 
2. Fundamentals: An oil tanker company’s financial statements and quarterly earnings reports can give insight into how viable the company would be as an investment. The company’s earnings per share (EPS), its price-to-earnings ratio and its dividend directly relate to its stock price. 
3. Leases and Contracts: Oil tanker companies’ leases and contracts are generally made with oil producers and refiners located in various countries around the world. Geopolitical events in those countries could be important factors that might directly affect the company’s bottom line and stock price. 

Are Oil Tanker Stocks a Good Investment?

The short answer to this question is probably not. The oil business and global dependence on fossil fuels for energy are gradually ending as newer and more environmentally sustainable technologies increasingly replace oil as an energy source. The oil tanker stocks listed above also produced dismal long-term results for investors in recent years, an example being NAT which saw a decline of 85% over the past decade. Although these stocks may not be a good long-term investment, they can make an interesting vehicle for short-term speculation and day trading due to their volatility.