Morgan Stanley has released a research report suggesting that while the market generally views this year as the peak of the tanker shipping upcycle, the bank believes next year's performance could surpass this year's, given the delayed reopening of the Strait of Hormuz.

The report highlights that the continued decline in global oil inventories, which is driving restocking demand, China's removal of fuel export restrictions boosting seaborne import demand, and the geopolitical effects stemming from the Strait of Hormuz disruption, all support persistently high freight rates in both spot and time charter markets.

Morgan Stanley anticipates that the tanker market will remain undersupplied next year. The bank has raised its earnings per share forecasts for China COSCO Shipping Energy (01138) for 2027 and 2028 by 40% and 27%, respectively, and increased EPS estimates for China Merchants Energy Shipping (601872.SH) by 41% and 35%, maintaining target prices of HK$26 and RMB25.1, respectively.

However, due to changes in the bank's exchange rate assumptions, the A-share target price for China COSCO Shipping Energy (600026.SH) has been trimmed from RMB31.6 to RMB30.4.