The Most Extreme Shipping Market in History, Explained | J Mintzmyer on Why Oil Tanker Rates Are Up 25x and Why It Can’t Last (and Why Dry Bulk, not Tankers, is the Next Shipping Boom)

Jack Farley (0:00)

Words like crisis or historic really do not even begin to capture what is going on with tankers and the Strait of Hormuz. I mean, you will get into the numbers, but some of these tanker rates have gone up 25 times. Not 25%, 25 times. So it's definitely the most extreme time to be a ship owner or ship investor. Right now, talking tankers, transporting crude oil as well as refined products, got someone very special to join us today.

He has had a very good track record, not just of calling the cycle, but as well as picking stocks, model portfolio up roughly 40% since inception a decade ago. This episode is brought to you by Sarmaya Partners, who manages the Return to Tangibles ETF, Lens, ticker L-E-N-S, the Sarmaya Thematic ETF, built for a return to tangibles. Learn more at sarmayetf.com and see the show notes for disclosures. Let's get into it. I'm joined today by J Mintzmyer, Founder and President of Value Investors Edge, focused on shipping and energy. Jay, great to have you here on Monetary Matters. I know that this market and shipping right here, right now, particularly crude tanker markets for shipping, is historic. Just how high are the shipping rates? Just how high are the shipping values? And just how crazy is this global tanker market that we have right here because of the Iran War and the closure of the Strait of Hormuz?

J Mintzmyer (1:20)

Absolutely, Jack. And first of all, thank you so much for having me on your podcast. You've been doing some great work across the sector, and I hear you've already talked to Ed Finn Richardson, and he's probably given your listeners some great gouge into the shipping sector as well. So thanks again for having me on. To hit the question head on about the tankers and how crazy things are, unprecedented is clearly the word there. We have spot rates recently, just in the last few days. And I don't know when you're going to publish this, Jack, but we're recording on the evening of September 30th, 2026 I always have to say that now if I talk about something because things change so much and even in a week or two from now, we could be seeing totally different markets. But recent spot rates. So if you just want to hire a tanker and bring it into the Middle Eastern Gulf, load it with oil and transport that oil to China, that's going to cost around 1 million to 1.2 million dollars per day to rent that tanker. And so those tankers, they hold about 2 million barrels of oil, the VLCCs, the very large crude carriers. And so you think about a million dollars a day so we can use round numbers. Call it a 60 day round trip to go from the Middle East Gulf to China and back. So $60 million to carry 2 million barrels of oil. So the amount of cargo shipping cost in that barrel of oil is record highs, unprecedented. A normal tanker rate, just to put things in perspective, is probably between 20 and 40,000 per day.

So we're talking massive numbers, 25, 30 times what we would normally see in this kind of market. Now it's not just spot rates, Jack. The longer term rates, if you were going to fix out one of those modern tankers for a year, you'd be looking at recently about 150 to 170,000 per day for the entire year. And so you'd ask, well, why would a company do that when they can make 1.1 million? Well, maybe they can't get the ship there in the next week or two, or maybe they want certainty, right? $170,000 a day times 365 days with no downtime. That's a lot of certainty. That's a lot of revenue.

So those rates, Jack, a normal charter rate is going to look like 25, 30,000 for a year. And we're talking 170 for a year.

The asset valuations, right? If you have high rates, high spot rates, high charter rates, you're going to see strong asset valuations. And those are at all time record highs. They're even higher than 2007, 2008

So we see extremely strong conditions across the market. And Jack, I'm sure you got a lot of follow ups. And how did we get here? And where are we going? I can do a little bit better at the history. Predictions are always tough, but I'm happy to talk shipping.

Jack Farley (3:54)

Wow. So on the VLCC rates in the spot market, they went from $40,000 a day to over a million dollars a day, 25 times increase, not 25%, 25 times. So if this move was 30% as extreme, it would still be off the charts. We'd still be talking about it. We'd still be calling it crazy. And it's three times that. Wow.