GTHT has released a research report highlighting its continued strong recommendation for the oil shipping sector since 2025, citing a second phase of industry upcycle and the additional value of unexpected supply-demand options stemming from changes in the grey market. Over recent months, freight rates have surged dramatically, and it is now highly certain that tanker profits for Q1 2026 will show a several-fold increase year-on-year. The outbreak of war involving the US, Israel, and Iran is expected to intensify impacts on oil prices and oil shipping; close attention should be paid to subsequent developments in the Middle East and shifts in the grey market. The firm remains optimistic about the long-term super-cycle logic for oil shipping, based on increased crude output and inelastic supply, with recent developments partially reflecting these unexpected supply-demand options. GTHT's key views are as follows:

The long-term logic for oil shipping: From geopolitical conflicts to increased crude production, potentially driving a super-cycle in two phases. 1) Phase One: Geopolitical conflicts primarily drive the industry upcycle. The Russia-Ukraine conflict in early 2022 initiated a global restructuring of oil trade. The shift away from Russian supplies to Europe, involving longer routes, significantly increased average voyage distances and boosted ton-mile demand by over 10%. This pushed tanker capacity utilization near its threshold, leading to a multi-year rise in industry prosperity. 2) Phase Two: Global increases in crude oil production are expected to continue driving an above-expectation rise in oil shipping demand. OPEC+ began increasing production in April 2025, signaling a transition for global crude supply from a reduction cycle to a growth cycle. Higher crude output benefits oil shipping demand growth, while lower oil prices help ensure that production increases translate into higher exports and subsequently greater shipping demand. Concurrently, the tanker fleet is expected to continue aging at an accelerated pace over the next five years. Stricter environmental regulations and sanctions on shadow fleets are projected to keep effective capacity supply in the compliant market relatively inelastic. Supply-demand fundamentals for oil shipping are expected to continue improving, potentially leading to an unexpectedly strong upcycle and the emergence of a first-ever super-cycle.

Oil shipping carries unexpected options: Changes in the grey market could introduce supply-demand surprises, leading to supernormal high prosperity. In recent years, US sanctions on oil exports from Iran, Russia, and Venezuela have created a significant grey market in oil shipping—older tankers operating as a shadow fleet provide continuous transportation services for these regions. In early 2025, stricter US sanctions on Iran and its associated shadow fleet led to a notable decline in the operational efficiency of these vessels. By August 2025, heightened US sanctions on Russia, including secondary sanctions on India, caused India to reduce Russian oil imports and turn instead to compliant crude, benefiting supply-demand dynamics in the compliant market. Since 2026, US actions against Venezuela and a series of control measures, coupled with the recent outbreak of war involving the US, Israel, and Iran, warrant close monitoring of Middle Eastern developments and grey market shifts. Should sanctions on crude exports from countries like Iran and Venezuela be lifted in the future, compliant oil shipping demand would see a significant boost. This would substantially reduce the operational space for the shadow fleet grey market, potentially accelerating the scrapping of older tankers and enabling unexpectedly high prosperity in the compliant market.

Oil shipping freight rates have hit five-year highs; owners' enhanced capacity control adds further support. In the first half of 2025, as oil prices moderated and sanctions on Iran tightened, tanker capacity utilization recovered to near-threshold levels, making freight rates highly sensitive to marginal changes in supply and demand. Since August 2025, substantial production increases in the Middle East and South America, combined with India's shift away from Russian oil towards compliant crude, have jointly driven high tanker utilization and a sharp rise in freight rates. Since 2026, escalating tensions in the Middle East have pushed oil prices higher, supporting stronger-than-seasonal oil shipping demand. This has also bolstered owner sentiment, leading to firm pricing strategies. Notably, VLCC Time Charter Equivalent rates have reached five-year highs during the traditional off-season. It is noteworthy that South Korean owner Sinyang Shipping has been actively expanding its tanker fleet through long-term charters and second-hand acquisitions, strengthening its control over capacity and enhancing pricing power. GTHT believes that enhanced capacity control by tanker owners will be particularly effective during periods of high industry utilization, providing an additional boost to freight rates and profitability amid the sector's strong upcycle.

Risks include economic fluctuations, geopolitical tensions, war, oil price volatility, policy changes, and safety incidents.