Orient: The US-Israel joint strike on Iran, the geopolitical options for oil transportation are expected to accelerate realization.

Orient released a research report stating that the three drivers of increased production, sanctions, and concentration in the transportation industry are pushing the oil shipping prosperity to continue to rise. The potential of a US attack on Iran or accelerated realization of geopolitical options may further boost the prosperity. Since 2026, the acquisition activities of Longjin Merchant Ships VLCCs have significantly increased industry concentration. The triple logic of increased oil production, continued sanctions, and increased industry concentration is gradually contributing to driving up freight rates to new highs in the past 5 years, with the one-year period charter reaching a historic high, demonstrating the industry's optimistic expectations for the future of oil shipping prosperity. A potential US attack on Iran or accelerated realization of geopolitical options may lead to an increase in the scrapping of old ships if sanctions on Iran are lifted in the future. It is expected that the supply and demand of oil shipping will continue to improve, driving prosperity to continue to rise. Orient's main points are as follows: The US attack on Iran is intensifying geopolitical conflicts On February 28, 2026, the US and Israel launched military strikes against Iran, triggering a massive retaliation from Iran and a rapid escalation of the situation in the Middle East. Since December 2024, the US has been continuously strengthening sanctions on Iran's shadow fleet, and the escalating US-Iran conflict may further drive the US to further intensify sanctions against Iran. The report attempts to speculate on three possible scenarios that may occur in the future oil shipping market, but given the complexity of geopolitics, it may not cover all possibilities. In terms of the final outcome, the report believes that under the current influence of the Middle East situation, the oil shipping prosperity may continue to increase, and the realization of oil shipping geopolitical options may accelerate. Scenario one: After the conflict erupts, the US and Iran return to negotiations The US continues to tighten sanctions on Iran's shadow fleet. After the conflict erupts, the US and Iran will continue to maintain the current situation through negotiations or long-term military conflicts. The US may continue to increase sanctions on Iran's shadow fleet in the future. Since December 2024, the US has been continuously strengthening sanctions on Iran's shadow fleet, with the proportion of VLCCs under sanctions globally increasing from 8% to 17%, and the scope of sanctions gradually expanding from single ships and shipowners to Chinese independent refineries, oil service companies, etc., to enhance the effectiveness of sanctions. The report predicts that the US's tightening of sanctions on Iran will impact the efficiency of Iran's crude oil exports, and may further reduce Iran's crude oil exports in the future. Importing countries may substitute Iran's oil through compliant markets, driving oil shipping prosperity further up. Scenario two: The US resolves conflicts with Iran through military or negotiation, and future sanctions on Iran may be lifted After the conflict erupts, the US and Iran reach a solution through military or negotiation. When an agreement leading to the lifting of sanctions is reached, Iran will re-enter the international oil market on the demand side, while on the supply side, with the regularization of Venezuela and Iran's crude oil exports, the shadow fleet loses its significance. Old ships in the former shadow fleet with poor conditions may face the fate of large-scale dismantling, significantly boosting oil shipping prosperity. Scenario three: Continued blockade of the Strait of Hormuz, having a significant impact on global oil The US launches a large-scale attack, and Iran subsequently retaliates, including attacking oil facilities in the region and attempting to block the Strait of Hormuz. If the Strait of Hormuz is blocked, it will have a huge impact on the global oil and oil shipping markets. Major OPEC member countries such as Saudi Arabia, Iran, the UAE, Kuwait, and Iraq all need to export crude oil by sea through the Strait of Hormuz. According to Kpler, about 30% of global oil shipping exports and over 70% of Middle Eastern oil shipping exports pass through the strait in 2025, making it crucial for oil exports. If the Strait of Hormuz is blocked, it will severely affect Middle Eastern crude oil shipping exports. All crude oil shipping exports from Iraq, Iran, Kuwait, and Qatar need to pass through the Strait of Hormuz. Short-term shipping prices may rise due to rush to transport, but in the long term, limited shipping volume due to limited demand may lead to a sharp drop. Considering the magnitude of its impact, the possibility of a long-term blockade of the Strait of Hormuz is relatively low, and it is more likely to see a scenario similar to the "Tanker War" between Iran and Iraq from 1981-1988, where the passage through the Strait of Hormuz was restricted for an extended period. The US will be forced to protect freedom of navigation, and tankers will be able to enter and exit the Persian Gulf under military escort, which may lead to a continuous rise in tanker shipping prices. Related targets: COSCO Shipping Energy Transportation, China Merchants Energy Shipping. Risk warning: Economic fluctuations, geopolitical risks, oil price risks, safety incidents, etc.