Guotai Haitong: The oil transportation industry welcomes a "super bull market" and expects the ultra-high prosperity to continue.

Guotai Haitong released a research report stating that the strategic value of oil transportation is prominent, expecting the ultra-high prosperity to continue, and maintaining a buy rating for the industry. Oil transportation has achieved a "super bull market" in two stages, with the gray market changes acting as "unexpected options," and the Middle East situation providing opportunities for change. The bank predicts that the mainstream market supply of oil transportation will remain rigid in the coming years, ensuring sustainable high prosperity in the oil transportation industry for several years. The strategic value of oil transportation is prominent, and the value of Chinese fleets is expected to exceed expectations. Guotai Haitong's main points are as follows: Long-term logic of oil transportation: "Super bull market" in two stages from 2022 to 2025 - even without geopolitical conflicts, high prosperity will continue for several years. 1) First stage: Global restructuring of oil trade. The Russia-Ukraine conflict at the beginning of 2022 opened up Russia-Europe "seeking far and near," significantly increasing oil transportation distances and ton-miles demand by over 10%, driving capacity utilization rates to threshold levels and significantly increasing prosperity. 2) Second stage: Global oil production increases. OPEC+ shifted towards increasing production from April 2025, starting a global cycle of increased oil supply, with significant production increases in South America in the second half of 2025 and beyond. The benefits of increased oil production began to show in the second half of 2025, combined with the US increasing sanctions on Russia leading to increased compliant VLCC demand from India, driving capacity utilization rates in oil transportation to high levels and entering a period of high prosperity. It is worth noting that Sinokor actively controls over a hundred VLCCs, and under high capacity utilization, spot market prices are extremely sensitive to changes in supply and demand margins. Even a small control of capacity can drive price surges, enhancing the price and profit performance under high prosperity. It is emphasized that even without geopolitical conflicts, high prosperity in oil transportation will continue for several years. Unexpected options in oil transportation: Gray market changes will provide "supply and demand surprises," and the Middle East situation in 2026 will provide opportunities - non-pulse effects will achieve ultra-high and sustainable prosperity In recent years, the US has imposed oil sanctions on Iran/Russia/Venezuela, leading to a significant gray market in oil transportation - bulkage of old tankers that should have been dismantled serving as shadow fleets to provide continuous service in related areas and diverting continuous flow from the compliant market. Since 2025, the US has intensified sanctions on shadow fleets, with 17% of VLCCs globally under US sanctions, mostly old tankers over 20 years old. If future sanctions on Iran are lifted, their exports will turn into compliant demand, and the shadow fleets will have difficulty returning to the compliant market, leading to ultra-high and sustainable prosperity in oil transportation for several years. The escalation of the situation in the Middle East in 2026 will provide opportunities for gray market changes. 1) Short term: Blockage in the Strait of Hormuz leads to reduced oil supply and trade disruptions, driving oil transportation prices to historical highs, and Chinese fleets flexibly adjusting routes will demonstrate unexpected value; 2) Medium term: If the strait is reopened, energy security strategies may drive global destocking and rush for transportation demand, ensuring sustained high prosperity; 3) Long term: It is advisable to focus on the Middle East situation and gray market changes; in the case of sanctions being lifted, oil transportation will experience ultra-high and sustainable prosperity, rather than pulse impacts. Supply and valuation of oil transportation: Sustainable high prosperity provides valuation space - accelerated aging + tight shipyards, mainstream market supply is rigid The prosperity of cyclical industries largely determines the performance space, and the sustainability of prosperity determines the valuation space. The oil transportation industry has a rare bottleneck in supply, ensuring its high prosperity for several years, thereby providing further valuation space. Since 2026, the expected sustained high prosperity has driven orders for VLCCs, with the current order backlog accounting for 22% and scheduled deliveries up to 2030. Considering the tight shipyard capacity, it is expected that there will be few new deliveries in the coming years. Moreover, oil tankers are still in an accelerated aging phase, with 27% of VLCCs expected to be over 20 years old in the next five years, making it difficult to maintain a fleet size of vessels under 20 years old even with deliveries as scheduled. The bank predicts that the mainstream market supply of oil transportation will remain rigid in the coming years, ensuring sustainable high prosperity in the oil transportation industry for several years. Risk factors: Geopolitical situations, economy, sanctions, oil prices, industry policies, safety accidents, etc.