Shares of COSCO SHIP ENGY (ASX: 01138) climbed more than 5% during early trading. At the time of reporting, the stock was up 4.95% to HKD 16.32, with a trading volume reaching HKD 112 million.

JPMorgan's Analysis and Rating

JPMorgan released a research report indicating that a potential peace agreement between the United States and Iran significantly increases the likelihood of reopening the Strait of Hormuz. This development is seen as a positive catalyst for tanker stocks. The reopening of the strait would enhance the possibility of normalized crude oil procurement activities and inventory rebuilding, thereby boosting demand for oil tankers. The firm reiterated its "overweight" rating on COSCO SHIP ENGY with a target price of HKD 27.

Impact on Tanker Market Dynamics

The report noted that since the onset of conflict in the Middle East, the market has lost approximately 1.3 billion barrels of oil supply. This has forced the market to source imports from countries with longer shipping routes, such as the United States, West Africa, and Brazil, driving Very Large Crude Carrier (VLCC) freight rates above historical averages. The bank believes the recent weakness in tanker stock prices reflects diminished market confidence in panic inventory restocking rather than a deterioration in the industry's fundamental conditions.