3 Reasons The Iran War Could Send This Overlooked Energy …

By Thomas Niel – Mar 31, 2026 at 9:45PM EST

Key Points

• Frontline, the world’s largest operator of VLCC oil tankers, is positioned to benefit from the ongoing Strait of Hormuz crisis.

• As VLCC charter rate spike, Frontline, with its high amount of operating leverage, is poised to experience a big jump in profitability this year.

• With the market still anticipating this issue being resolved in weeks, not months, Frontline s have strong appreciation potential.

1. Disruption to the Strait of Hormuz has a direct bullish impact on Frontline

Considered the most important maritime choke point on Earth, any hindrance to the Strait of Hormuz’s normal operation affects about 20% of the global crude oil supply, in turn dramatically affecting prices. However, what’s even more dramatic is the impact of said disruption on oil tanker day rates.

When the Strait of Hormuz is not fully available, ships must go the alternate route, sailing across Western Africa and the Cape of Good Hope. This means it costs more money to get oil from point A to point B. With more tankers having to take the longer route, fewer are available overall.

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NYSE: FRO

Frontline Plc

Today’s Change

(4.40%) $1.47

Current Price

$34.86

Key Data Points

Market Cap

$7.8B

Day’s Range

$33.82 – $35.00

52wk Range

$12.40 – $39.89

Volume

4.1M

Avg Vol

4M

Gross Margin

32.77%

Dividend Yield

5.05%

This, in turn, leads to higher daily charter rates worldwide, not just in the Middle East. Frontline’s fleet consists primarily of Very Large Crude Carriers (VLCCs). During times of strife, day rates for these oil tankers can spike dramatically, in turn significantly impacting near-term profitability.

2. Frontline benefits greatly from high operating leverage

other tanker operators, Frontline has a high degree of operating leverage. That is, with most of its operating expenses fixed, incremental revenue increases can flow straight to the bottom line. Even in times of modest price movement, this leads to a tremendous increase in profitability. During times when prices really spike, the impact can be even more dramatic.

We are currently seeing this play out as the conflict between the U.S. and Iran intensifies and the Strait of Hormuz remains closed. Spot VLCC day charter rates keep spiking, with the daily rate for the benchmark Middle East-to-China route hitting an all-time high of $423,736. Even if the price shock cools, prices are ly to remain elevated relative to pre-war levels.

At the start of 2026, prior to the start of this latest Mideast conflict, Frontline was reporting time charters averaging $76,900 per day. Frontline doesn’t report earnings and guidance again until May, but sell-side analysts have already raised their 2026 earnings forecasts. On average, analysts estimate Frontline will report earnings of $3.62 per this year, more than double last year’s reported earnings.

3. Analysts and investors are conservative about this tailwind

Even as a possible resolution appears murky, sell-side forecasts also view this tailwind as having only a temporary big impact on earnings. While estimating earnings well north of $3.50 per in 2026, 2027 calls for EPS to fall back to around $2.35 . Considering this, you may think Frontline is pricey after its run-up from around $20 to just over $33 per .

However, if elevated rates persist and Frontline’s earnings beat expectations, forget about this stock climbing back toward recent highs just under $40 per . A further re-rating could occur if anticipated earnings for 2026 and 2027 increase from current levels.

That’s not all. In the meantime, Frontline has a dividend yield of 5.2%, making this stock one of the most interesting opportunities among high-yield dividend stocks right now.

If you’re skeptical that the oil price shock will last, feel no need to dive into this stock. However, if you believe these issues will resolve soon, Frontline offers a great way to add exposure to this sector to your portfolio.

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About the Author

Thomas Niel is a contributing Analyst at The Motley Fool, covering publicly traded companies in the consumer goods and technology sectors. Prior to the Motley Fool, Thomas was a contributing Analyst for several online investing publications, including InvestorPlace, Seeking Alpha, and TipRanks. He also has past career experience in the accounting and government contracting industries. He holds a B.B.A. in Accounting from Marymount University. Thomas won his school’s geography bee in the fifth grade, but retired from the professional geography bee circuit shortly thereafter.

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