The recent move by OPEC to reduce oil production is fundamentally shifting several markets. Oil stocks, electric vehicle stocks, and more were destabilized in Monday’s trading. This included the market for oil tanker stocks, as many of these are getting hit hard today.
While some aren’t getting hit quite as hard as others, the term “bloodbath” isn’t exactly out of line. DHT Holdings (NYSE:DHT) was down just over 12%. Frontline (NYSE:FRO) was down nearly 10%. Teekay Tankers (NYSE:TNK) lost just over 9%. Torm (NASDAQ:TRMD) lost just under 8%, and Euronav (NYSE:EURN) got off perhaps the lightest at a 4.38% loss. The basic thesis behind the loss is simple enough; oil prices may be rising, but that’s because oil production is declining. With less oil in the system, fewer tankers will be needed to transport it from place to place.
Analysts already project a decline in demand for tankers starting May 1. While there were certainly factors giving the tanker sector some support in previous days—including the issues seen around Russian oil due to the Russia-Ukraine war—those are likely to turn around with the latest OPEC decline. With an estimated 40% of worldwide crude oil output shipped by sea, a loss of crude output will weigh heavily on tanker traffic.
The biggest loser in today’s trading was DHT Holdings; not only was it hit hardest by the decline, but it also has the lowest upside potential. Though analysts call it a Strong Buy, its $12.62 average price target gives it a 32.7% upside potential. Meanwhile, Euronav, the lightest-hit stock on this list, boasts one of the largest upsides. It’s only a Moderate Buy, but Euronav shares offer 41.76% upside potential thanks to their average price target of $22.76.
