‘Drill, baby, drill’ and ‘liquid gold’ were two of the phrases president-elect Donald Trump repeated during his victory rally in Florida yesterday and a common consensus is building among shipping experts that the Republican’s return to the White House will be positive for tankers, but less so for container shipping.
In energy markets, Trump’s stance emphasises increased domestic oil and gas production, aiming for “energy dominance” by reducing regulations and promoting drilling. His plans to dismantle climate policies, including those established under the Inflation Reduction Act, would facilitate fossil fuel development. Trump also supports the construction of pipelines and other infrastructure to bolster energy distribution and export capabilities.
“This bodes well for oil and gas exports and potentially bullish for tankers,” commented Burak Cetinok, head of research at broker Arrow.
Trump is also likely to adopt a stricter stance toward Iran, possibly enforcing sanctions more rigorously. This could result in lower Iranian oil on the water, Cetoinok said. This would have to be replaced with barrels from other producers.
“Substituting sanctioned volumes with non-sanctioned barrels could boost legitimate trades as the dark fleet would find it difficult to compete for cargoes,” Cetinok said, something he felt was another potentially bullish outcome for tankers.
Lars Barstad, CEO of tanker giant Frontline, stated via social media that Trump’s expected more firm line on Iran as well as Venezuela sanctions would likely see a greater crackdown on the dark fleet, and since OPEC has plenty of oil on the sidelines, this could be beneficial for the safety of the oceans and the compliant tanker fleet.
Omar Nokta, a shipping analyst with Jefferies, argued that a new Trump presidency could usher in a quicker end to the ongoing Russia-Ukraine war and Israel-Hamas conflict.
“The Russia-Ukraine war has been supportive for tankers, while easing sanctions on Iran have been negative. Should these reverse, it is likely that the tanker balance-of-power would shift more towards VLCCs versus the mid-size segments,” Nokta wrote in a note to clients yesterday.
For dry bulk, Trump’s policies are unlikely to directly impact trades overall, according to analysis from Arrow, even if China went ahead and sourced grain from Brazil rather than the US in the event of a trade war.
Arrow’s Cetinok argued that the container sector appears most vulnerable to Trump’s policies in the medium to long term.
“While short-term demand may experience a surge as buyers front-load purchases ahead of tariffs, exports will likely decline sharply once tariffs are enacted,” Cetinok predicted. This downturn would coincide with a rise in containership deliveries expected in the coming years.
Peace in Gaza and a tougher stance on Iran could eventually lead to safer passage through the Red Sea, something Nokta from Jefferies said would be negative for container shipping.
“2024 has been a strong year due to Red Sea diversions but also as trade volumes have grown at 2x the rate of global GDP, which we think is likely to revert naturally to a lower ratio going forward especially as protectionist measures and potential tariffs limit trade growth,” Nokta suggested.
Concluding, Mark Williams, who heads up UK consultancy Shipping Strategy, told Splash: “Tariffs are bad for shipping, so Trump will probably not be good for shipping.”
“Higher inflation in the US is the most likely outcome, as it was in the past when US administrations have blamed overseas suppliers for a current account deficit,” Williams said, going on to warn about how the risks of stagflation – less economic activity and higher costs – tend to go up when tariffs kick in.
