Guotai Haitong Securities Co., Ltd. has released a research report advocating for an increased focus on non-pulse investment opportunities in the oil shipping sector, recommending an overweight position. The reopening of the Strait of Hormuz is expected to drive the sector's capacity utilization back to high levels, with the control exerted by Sinokor Merchant Marine providing further positive impetus. The potential lifting of sanctions on Iran is anticipated to deliver a "demand surprise," while shipyard capacity constraints will ensure a "supply bottleneck," collectively offering room for both earnings growth and valuation expansion. The key points from Guotai Haitong Securities' analysis are as follows:

Prior to the Middle East conflict, the oil shipping market had already entered a "super cycle," and high prosperity was expected to persist for several years even without geopolitical tensions. From 2022 to 2025, the market progressed through two phases into this super cycle. The first phase involved a global restructuring of oil trade flows. The Russia-Ukraine conflict initiated a "detour" for Russian oil to Europe, significantly lengthening shipping distances and driving capacity utilization up to a critical threshold. The second phase saw the commencement of a global increase in crude oil production. OPEC+ shifted to increasing output from April 2025, followed by substantial production hikes in South America in the latter half of the year, coupled with rising compliant demand from India. These factors collectively pushed capacity utilization beyond the threshold and into a period of high prosperity. Notably, Sinokor Merchant Marine has been actively controlling over 100 VLCCs (Very Large Crude Carriers); this enhanced control over vessel supply adds further strength to freight rate performance within the high-demand environment. Considering the sustained increase in crude oil production and the rigidity of tanker supply, the high prosperity in oil shipping is projected to last for several years, even absent geopolitical conflicts.

The Middle East conflict and subsequent Strait disruptions have reduced oil shipping demand, while trade dislocations have kept freight rate benchmarks elevated. The US-Iran-Israel war that broke out in late February 2026 has led to ongoing disruptions in the Strait of Hormuz over the past months. It is estimated that seaborne crude oil exports from the Middle East have been reduced by more than half, decreasing global seaborne crude volumes (in tons) by over 10%. Exports from the US Gulf and South America have grown by more than 20%. While the lengthening of shipping distances has offset some of the impact, a gap remains in overall oil shipping demand (ton-miles). In the initial phase of the conflict, freight rates surged dramatically to record highs, driven primarily by war risk premiums, panic shipping, and trade dislocations. As regional supply-demand imbalances have improved over the past month, freight rates have gradually declined as expected. Currently, Time Charter Equivalent (TCE) rates for key VLCC routes remain near $100,000 per day, significantly above the average of the past two decades and the 2025 annual average.

Impact One of US-Iran Talks: Strait of Hormuz Reopening

The reopening of the Strait of Hormuz is expected to restore oil shipping capacity utilization to high levels, and potential restocking demand could further elevate the sector's prosperity. According to reports, an agreement has been reached between the US and Iran to reopen the Strait of Hormuz. Should the Strait reopen and Middle Eastern exports resume, capacity utilization in oil shipping would return to the high levels seen before the conflict, with Sinokor's market control providing additional support. Concurrently, global inventories have experienced a record drawdown over the past months, making subsequent restocking a likely and anticipated event. If some nations further increase their strategic reserve targets based on energy security concerns, it would further boost restocking demand. It is noted that the scale and pace of restocking will correlate with oil futures prices, spot prices, and the speed of crude production increases. The current one-year time charter rate for VLCCs exceeds $120,000 per day, reflecting the optimistic expectations within the industry for the continuation of high prosperity in oil shipping, with high profitability anticipated as certain for 2026-2027.

Impact Two of US-Iran Talks: Lifting of Iranian Oil Sanctions

The lifting of sanctions on Iranian oil would create a period of exceptionally high and sustainable prosperity in the compliant oil shipping market and, more importantly, unlock significant valuation upside. Long-standing US sanctions on Iranian oil have fostered a "shadow fleet" market and delayed the scrapping of older tankers. Since 2025, intensified US sanctions have affected approximately 17% of the global VLCC fleet, leaving the compliant market with just over 700 VLCCs. If sanctions on Iran are lifted, demand in the compliant oil shipping market could increase by about 5%, with an even larger increase for VLCCs. The shadow fleet vessels, typically over 20 years old, long detached from mainstream insurance systems, and unlikely to pass inspections by major oil companies, are expected to face significant hurdles in re-entering the compliant market. With minimal growth anticipated in the sub-20-year-old VLCC fleet over the next five years, the lifting of Iranian sanctions would provide a "demand surprise" for the compliant market. This would underpin a period of exceptionally high and sustainable prosperity, opening up substantial room for valuation expansion.

Risk factors include economic fluctuations, geopolitical developments, and potential underperformance in the implementation of sanctions and environmental regulations.