The Suez Canal and the Bab-el-Mandeb Strait were, for decades, the most efficient route connecting Europe and Asia. Product tankers, Suezmax crude carriers, and other vessels used the route because it cut thousands of miles off the alternative: sailing around the Cape of Good Hope at the southern tip of Africa. When Houthi attacks on commercial shipping in the Red Sea began in late 2023, that calculus changed. In 2026, the disruption has not fully resolved. Its effects on tanker ton-miles, vessel demand, and rates continue to show up in earnings.
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This is not the same story as the Strait of Hormuz, which sits at the northern end of the Persian Gulf and primarily threatens crude oil export flows from the Middle East. Bab-el-Mandeb is a different chokepoint, affecting a different set of trade routes and a different mix of vessel types. Understanding how the Red Sea disruption affects tanker stocks requires looking at which vessels are rerouting, how ton-miles increase when those vessels use the Cape route, and which stocks in the tanker sector benefit most from sustained route displacement.
1. The Bab-el-Mandeb Chokepoint Explained
The Bab-el-Mandeb Strait sits at the southern entrance to the Red Sea, connecting the Gulf of Aden to the sea lane running north through the Red Sea to the Suez Canal. Vessels traveling between Asia and Europe using the canal must pass through Bab-el-Mandeb. The strait is roughly 20 miles wide at its narrowest point, making it one of the most constrained major shipping chokepoints in the world.
In late 2023, the Houthi movement based in Yemen began targeting commercial vessels in the Red Sea. The initial attacks focused on ships with perceived ties to Israel. Over subsequent months, the targeting broadened. Insurance premiums for Red Sea transit rose sharply. War risk surcharges appeared in shipping contracts. Most major container lines rerouted around the Cape of Good Hope by early 2024.
Tanker operators responded at different speeds with different risk assessments. Some continued transiting the Red Sea with enhanced security measures. Others diverted to the Cape route. By 2025 and into 2026, the transit picture was fragmented. A ceasefire agreement reached in early 2025 reduced the intensity of Houthi attacks, but the security environment remained elevated relative to pre-2023 conditions. Insurance premiums stayed above the baseline. Major tanker operators continued evaluating each voyage individually rather than resuming routine Red Sea transits.
2. Which Vessel Types Are Most Affected
Not all tankers are equally disrupted by Red Sea conditions. The impact depends on each vessel’s typical trading routes.
VLCCs, which carry crude oil primarily from the Middle East and West Africa to Asia, often do not use the Suez Canal in their primary laden voyages. Their core routes run around the Cape of Good Hope eastbound or across the Atlantic. The Suez route is also constrained for the largest VLCCs based on canal dimensions. The Red Sea disruption affects VLCC earnings indirectly, primarily through ballast voyage planning and insurance cost adjustments.
Suezmax tankers, sized between 120,000 and 200,000 deadweight tons (DWT), are built for the Suez Canal. They carry crude oil and some refined products between the Middle East, Europe, and the Eastern Mediterranean. International Seaways (INSW) and Teekay Tankers (TNK) operate vessels in this category. For Suezmax operators, a Cape of Good Hope diversion on a Middle East to Europe voyage adds roughly 10 to 14 days and meaningfully increases fuel and voyage costs.
MR product tankers are the most affected segment. European fuel markets have historically received MR cargoes from refineries in the Middle East and India via the Suez-Red Sea route. A voyage from Jeddah or Ruwais in the UAE to Rotterdam via Suez takes roughly 12 to 13 days. The same voyage around the Cape of Good Hope takes 25 to 27 days. That route extension removes vessels from the active trading pool for weeks at a time.
An MR tanker voyage from Jeddah to Rotterdam stretched from about 13 days via Suez to more than 25 days via the Cape of Good Hope. That single route change absorbed vessel-weeks that would otherwise have been available for other cargoes across the global MR market.
3. How Ton-Miles Translate to Higher Rates
Ton-miles are the metric that explains why rerouting benefits tanker investors. One ton-mile equals one metric ton of cargo moved one nautical mile. A product tanker carrying 35,000 metric tons from Jeddah to Rotterdam via Suez covers roughly 7,600 nautical miles. Via the Cape of Good Hope, the same vessel covers roughly 13,700 nautical miles. The ton-mile count increases by approximately 80 percent for the same cargo volume.
Higher ton-miles per voyage mean the same cargo volume absorbs more vessel capacity. If 100 ships can move a given volume of product via Suez in a month, you need roughly 140 to 160 ships to move the same volume via the Cape in the same period. Supply of available vessels tightens. Rates rise to reflect the scarcity.
Tanker companies do not charge directly by the ton-mile. They charge a voyage rate or a daily charter rate. But the underlying supply-demand balance that sets those rates is driven by ton-miles. When ton-miles per voyage rise because trade routes lengthen, vessel supply tightens and daily rates increase. That is the mechanism connecting Red Sea disruption to tanker stock earnings.
4. The 2026 State of Red Sea Avoidance
In early 2026, the picture is more nuanced than at the peak of disruption in 2024. The ceasefire negotiated in early 2025 reduced the frequency and intensity of Houthi attacks. Some product tanker operators resumed Red Sea transits, particularly on routes where the risk profile was assessed as lower. Others maintained Cape of Good Hope routings as a matter of policy.
The result is a tanker market that prices in a partial ton-mile benefit from Red Sea avoidance, not the full diversion premium of 2024. Shipping intelligence services including Clarksons and Vortexa track what percentage of MR product tankers and Suezmax crude carriers are using the Cape route versus the Suez Canal route in a given month. Those percentages have fluctuated between roughly 30 percent and 60 percent depending on security conditions and the specific vessel category.
Even at 30 percent diversion, the ton-mile impact is measurable. A market where 30 percent of MR voyages on the Europe-to-Asia corridor are running 80 percent longer is a meaningfully tighter supply environment than a market where all vessels use Suez. The tightening does not disappear just because full-scale diversion has eased from its 2024 peak.
5. What This Means for STNG, HAFN, and INSW
Scorpio Tankers (STNG) and Hafnia (HAFN) are the primary beneficiaries of MR product tanker route lengthening. Both companies operate large MR fleets that serve the Asia-to-Europe product trade corridors most affected by Bab-el-Mandeb disruption. When MR product tanker ton-mile demand rises because of Cape of Good Hope rerouting, the effect shows up in quarterly time charter equivalent (TCE) rates.
Scorpio and Hafnia benefit most from sustained Red Sea avoidance because their MR fleets operate exactly the routes that Cape rerouting lengthens most. Every additional day at sea on a diverted voyage is an additional day of charter revenue.
International Seaways (INSW) operates Suezmax vessels alongside its VLCC and Aframax fleet. Suezmax vessels are sized for the Suez Canal. If those vessels divert around the Cape to avoid Red Sea risk, voyage duration and ton-mile generation increase similarly. INSW benefits both from Suezmax route extension on affected Middle East to Europe voyages and from the general supply tightening that higher Suezmax ton-mile demand creates.
The shadow fleet dynamic adds a parallel layer to this picture. As documented in the shadow fleet analysis published on TxZen, sanctioned vessels withdrawing from legitimate trade routes reduce competing capacity. The Red Sea ton-mile effect works in parallel: it adds effective demand rather than removing supply. Together, both factors support the underlying rate environment for legitimate tanker operators in 2026.
6. How to Track the Red Sea Signal
The most direct signal is the split between Cape of Good Hope routing and Suez Canal routing for product tankers and Suezmax vessels. Vortexa, Kpler, and Clarksons publish vessel tracking data showing how many vessels are using each route week by week. These data points update frequently enough to give investors directional information ahead of quarterly earnings releases.
The Suez Canal Authority also publishes transit statistics. A sustained drop in product tanker and Suezmax transits relative to pre-2023 historical levels signals that diversion is still significant. A recovery toward historical transit levels signals that the ton-mile tailwind from rerouting is fading.
For quarterly earnings context, watch how STNG and HAFN management discuss ton-mile demand in their investor presentations. Both companies have referenced the Red Sea effect in prior quarters. If their language becomes more cautious about route displacement, it signals the diversion benefit may be narrowing. If it remains constructive, the earnings tailwind continues.
Investors watching Bab-el-Mandeb should also monitor developments in Yemen and the broader Red Sea diplomatic picture. A durable peace agreement that allows full commercial transit to resume safely would reduce the ton-mile premium in the MR product tanker and Suezmax segments. That scenario would be negative for STNG, HAFN, and INSW relative to current rate levels, which incorporate some diversion benefit. The absence of a durable resolution, which has been the case through 2025 and into 2026, is the base case that supports the current rate environment.
7. Bab-el-Mandeb Versus Hormuz
Tanker investors often mention Hormuz and Bab-el-Mandeb together, but the two chokepoints affect different markets. The Strait of Hormuz at the northern end of the Persian Gulf primarily threatens crude oil export flows from Saudi Arabia, Iraq, the UAE, Kuwait, and Iran. A Hormuz closure would affect VLCC and Suezmax crude tanker routes most severely. FRO and DHT, which are VLCC-focused, would feel a Hormuz disruption most directly.
Bab-el-Mandeb is a transit route threat, not a production threat. It does not block oil from leaving the ground. It makes the Suez Canal inaccessible for vessels that want to avoid the Red Sea. That primarily affects product tankers and Suezmax crude carriers moving between Asia or the Middle East and Europe. STNG and HAFN feel Bab-el-Mandeb more than FRO does.
VLCC exposure is Hormuz exposure. MR product tanker exposure is Bab-el-Mandeb exposure. They are both real risks with real rate implications, and they call for separate monitoring with separate data sources. A tanker investor who tracks only Hormuz headlines while holding STNG or HAFN is watching the wrong signal entirely.