CICC released a research report stating that since late August, oil tanker freight rates have continued to rise, driven on one hand by increased Middle East cargo volumes, and on the other hand by increased Americas cargo volumes further tightening Middle East regional capacity. From the supply perspective, current freight rates already reflect tight oil tanker conditions, with the ship-to-cargo ratio in the Middle East region recently reaching historic lows. Considering that vessels already under charter cannot return in the short term, subsequent vessel supply may become even tighter. From the demand perspective, while the Middle East oil consumption peak season has passed, OPEC+ production increases' transmission to exports will continue, with OPEC+ still planning modest production increases in October. Referring to historical freight rate performance, Northern Hemisphere winter oil demand typically lasts three months, so cargo demand from the upcoming peak season is expected to continue or increase. CICC's main views are as follows:

This year's peak season freight rates are expected to maintain high prosperity. Since late August, oil tanker freight rates have continued to rise, driven on one hand by increased Middle East cargo volumes (which aligns with previous emphasis that Middle East production increases would begin transmitting to exports and freight rates starting in September), and on the other hand by increased Americas cargo volumes further tightening Middle East regional capacity. Looking forward, the fourth quarter peak season is expected to continue the current prosperous market conditions: 1) From the supply side, current freight rates already reflect tight oil tanker vessel conditions, with the Middle East region's ship-to-cargo ratio recently reaching historic lows. Considering that vessels already under charter cannot return in the short term, subsequent vessel supply may become even tighter; 2) From the demand side, while the Middle East oil consumption peak season has passed, OPEC+ production increases' transmission to exports will continue, with OPEC+ still planning modest production increases in October. Referring to historical freight rate performance, Northern Hemisphere winter oil demand typically lasts three months, so cargo demand from the upcoming peak season is expected to continue or increase.

Continued black ship sanctions are a long-term driving factor for oil tanker supply-demand improvement. CICC believes that sanctions' impact on oil transport is not immediate but rather a gradual result of declining risk-return ratios. This year, the cumulative impact of continued US sanctions on Russian and Iranian crude oil exports is also an important variable driving freight rate increases. According to market data, Russian crude oil exports to China and India have declined compared to the past two years, while OPEC countries' crude oil exports to China and India have increased. Although Iranian crude oil exports currently remain at high levels, under the backdrop of low oil prices, OPEC+ production increases, and improved domestic refinery profits, the impact of continued sanctions on increasing compliant market demand will gradually become apparent. According to Gibson data, the black ship proportion for VLCCs is 23%, with sanctioned VLCCs accounting for 14% of the total.

Regarding target companies, earnings forecasts, target prices, and valuations for covered companies remain unchanged. With continued accumulation of supply-side tightness and marginal demand improvement, the firm is optimistic about peak season positioning opportunities in shipping sub-markets, favoring COSCO SHIP ENGY (01138), China Merchants Energy Shipping Co.,Ltd. (601872.SH), and Nanjing Tanker Corporation (601975.SH).

Risk factors include geopolitical changes and significant decline in global economic growth.