Why Teekay Tankers Stock Dropped Today
Key Points
Supertanker daily charter rates passed $1 million per day yesterday.
The Baltic Dirty Tanker Index doubled in September.
A reopened Strait might reverse those gains.
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Teekay Tankers (NYSE: TNK) stock soared in September. Shares of the maritime services provider, which gets 87% of its revenue from its tanker business, gained as much as 14% in September through Friday's close. Teekay is giving back some of those gains today -- down 2.9% through 10:55 a.m. ET.
But why was Teekay stock up in the first place?
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Tanker rates rise
Tanker rates are the reason. StreetInsider.com reports that the cost of chartering a Very Large Crude Carrier (VLCC) supertanker passed $1 million per day yesterday. That's up 5 times from what chartering a supertanker cost before the Iran war began Feb. 28.
The Baltic Dirty Tanker Index (BAID) makes it easy to track this rise. While it doesn't show precise dollar rates, the BAID uses a "point" system similar to the Dow Jones Industrial Average. The index closed just below 2,000 before the war, hit 2,421 at the beginning of September -- and has gone vertical this month, more than doubling to 5,092.
StreetInsider attributes the rate spike to "a near-shutdown of Hormuz traffic" that is slowing tanker traffic and making it harder to charter tankers.
Why is Teekay stock down today?
So what's changed to make Teekay stock slip today? Reuters reports that Iran offered over the weekend to reopen the Strait of Hormuz "within seven days" if the United States Navy lifts its blockade of Iranian shipping.
If this happens, oil should start moving again, and tankers will become easier (and cheaper) to charter. But this isn't the first time rumors that the Iran war is about to end have pushed oil stocks lower! The rumors might prove true this time -- or they might not.
If not, you can expect charter rates -- and Teekay stock -- to go right back up again.
Should you buy stock in Teekay Tankers right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
