InvestIdeas

Rates for tankers—the massive ships that move crude oil and natural gas around the world’s oceans—have soared in recent months. Operators of some types are able to charge four times as much for their bookings today than they were just last August.

New International Maritime Organization rules that require ships to reduce sulfur emissions went into effect on Jan. 1 and have had a twofold impact on the industry. They have increased demand for cleaner, more refined fuels, which are produced only in some regions and need to be shipped long distances—tying up tankers for longer.

The rules, known as IMO 2020, are also taking a significant number of tankers out of the water, as owners fit them with scrubbers that reduce sulfur emitted from their exhaust.

For shipping-stock investors with a long horizon, the outlook remains bullish. But in the short term, it could pay to be choosy.