GE Shipping, SCI Rally Up to 13% As Israel-Iran Tensions Fuel Tanker Rate Surge Hopes

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Shares of shipping companies surged on Friday amid escalating geopolitical tensions in the Middle East
Defence Stocks Rally: Shares of shipping companies surged on Friday amid escalating geopolitical tensions in the Middle East, as investors bet on a spike in tanker and container freight rates following Israel's military strike on Iran.
The Shipping Corporation of India (SCI) jumped as much as 13.3% to ₹233.80 on the BSE, while Great Eastern Shipping Company (GE Shipping) climbed 7.7% to ₹1,049.70. The rally comes as markets brace for potential supply chain disruptions and rising transport premiums across critical oil shipping routes.
Investor sentiment was rattled after Israel launched a large-scale offensive targeting Iranian nuclear and military infrastructure. Reports indicated explosions at Iran's Natanz uranium enrichment facility, with the country's Revolutionary Guards confirming the death of top commander Hossein Salami. In response, Israel declared a national emergency, anticipating retaliatory missile and drone attacks.
The geopolitical escalation sent shockwaves through global financial markets. Crude oil surged nearly 9%, with Brent futures spiking $6 to $75.36 per barrel, while WTI rose $6.16 to $74.20. Gold also advanced 1.5% to $3,434 per ounce, approaching its all-time high of $3,500.05, as investors rushed to safe-haven assets. Asian equities slumped and U.S. futures also declined sharply.
The Middle East, especially the Strait of Hormuz, remains a critical chokepoint for global oil shipments. While fears of a major disruption spooked traders, JPMorgan sought to downplay the risk of Iran closing the strait, calling it a 'low-risk event."
Still, the anticipation of higher war premiums and insurance costs on oil shipments has led to renewed interest in shipping stocks. With freight costs poised to rise, stocks like SCI and GE Shipping could benefit from improved earnings potential, analysts said.
First Published:
June 13, 2025, 13:43 IST

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Benchmark Brent crude prices have risen by 10% to over $77 a barrel since June 13. While Israel and Iran have targeted elements of each other's energy infrastructure, there has been no significant disruption to maritime activity in the region so far. But President Donald Trump's decision to join Israel by bombing three of Iran's main nuclear sites in the early hours of Sunday could alter Tehran's calculus. Iran, left with few cards to play, could retaliate by hitting U.S. targets across the region and disrupting oil flows. While such a move would almost certainly lead to a sharp spike in global energy prices, history and current market dynamics suggest any move would likely be less damaging than investors may fear. CAN THEY DO IT? The first question to ask is whether Iran is actually capable of seriously disrupting or blocking the Strait of Hormuz. The answer is probably yes. Iran could attempt to lay mines across the Strait, which is 34 km wide at its narrowest point. The country's army or the paramilitary Islamic Revolutionary Guard Corps could also try to strike or seize vessels in the Gulf, a method they have used on several occasions in recent years. Moreover, while Hormuz has never been fully blocked, it has been disrupted several times. During the 1980s Iran-Iraq war, the two sides engaged in the so-called "Tanker Wars" in the Gulf. Iraq targeted Iranian ships, and Iran attacked commercial ships, including Saudi and Kuwaiti oil tankers and even U.S. navy ships. Following appeals from Kuwait, then-U.S. President Ronald Reagan deployed the navy between 1987 and 1988 to protect convoys of oil tankers in what was known as Operation Earnest Will. It concluded shortly after a U.S. navy ship shot down Air Iran flight 655, killing all of its 290 passengers on board. Tensions in the strait flared up again at the end of 2007 in a series of skirmishes between the Iranian and U.S. navies. 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SPARE CACITY The current global oil market certainly has spare capacity. OPEC , an alliance of producing nations, today holds around 5.7 million barrels per day in excess capacity, of which Saudi Arabia and the United Arab Emirates hold 4.2 million bpd. The concern today is that the vast majority of the oil from Saudi Arabia and the UAE is shipped via the Strait of Hormuz. The two Gulf powers could bypass the strait by oil pipelines, however. Saudi Arabia, the world's top oil exporter, producing around 9 million bpd, has a crude pipeline that runs from the Abqaiq oilfield on the Gulf coast in the east to the Red Sea port city of Yanbu in the west. The pipeline has capacity of 5 million bpd and was able to temporarily expand its capacity by another 2 million bpd in 2019. The UAE, which produced 3.3 million bpd of crude oil in April, has a 1.5 million bpd pipeline linking its onshore oilfields to the Fujairah oil terminal that is east of the Strait of Hormuz. But this western route could be exposed to attacks from the Iran-backed Houthis in Yemen, who have severely disrupted shipping through the Suez Canal in recent years. Additionally, Iraq, Kuwait and Qatar currently have no clear alternatives to the strait. It is possible that Iran will choose not to take the dramatic step of blocking the strait in part because doing so would disrupt its own oil exports. Tehran may also consider any further escalation fruitless in light of U.S. involvement and will instead try to downplay the importance of the U.S. strikes and come back to nuclear negotiations. In the meantime, spooked energy markets, fearing further escalation, are apt to respond to the U.S. strikes with a sharp jump in crude prices. But even in a doomsday scenario where the Strait of Hormuz is blocked, history suggests markets should not expect any supply shock to be persistent. Enjoying this column? Check out Reuters Open Interest , your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn and X. This article was generated from an automated news agency feed without modifications to text.

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