Sinolink: The demand increment from emerging Asia-Pacific countries is driving the upward trend in oil transportation demand. We remain optimistic about the unfolding of the oil shipping prosperity cycle.

Sinolink has released a research report stating that current orders are at a historical low, with rigid supply conditions determined. Global inventory replenishment provides support from the demand side, and the incremental demand from emerging Asia-Pacific countries such as China and India is driving up oil shipping demand. Following the US-Iran conflict, the restructuring of global oil trade has significantly extended shipping distances. Increased shipments from areas with long distances, such as the US Gulf, South America, and West Africa, are expected to further drive up demand measured in ton-miles. The firm remains optimistic about the unfolding of the oil shipping prosperity cycle. Sinolink's main viewpoints are as follows: Tensions in the Middle East and disruptions in the Strait of Hormuz continue to sustain high oil shipping rates. The geopolitical situation in the Middle East is disrupting the oil shipping super cycle. The conflict between the US and Iran erupted on February 28, severely disrupting passage through the Strait of Hormuz. With the rise in risk premiums, the TD3C-TCE level quickly soared to over $400,000 per day; however, the transaction volume on this route is extremely low and cannot represent the actual earnings of shipowners. VLCC transactions are primarily concentrated in the Red Sea, West Africa, and the US Gulf of Mexico. Currently, we are in a phase of US-Iran rivalry, with fluctuating closure scenarios in the Strait affecting market confidence. Coupled with new geopolitical risks emerging in the Red Sea region, the market logic remains repetitive in the short term: Strait passage disruptions Tight oil supply + Vessels detouring for safety Rising shipping prices; therefore, the firm believes that oil shipping will remain prosperous in the short term. The shipping market is buoyed by freight rates, showing high prosperity: For one-year charter rates in June 2026, Aframax/Suezmax/VLCC prices decreased by -15.50%/-2.22%/-1.90% month-on-month, but increased by +60.42%/+100.60%/+136.43% year-on-year, with rental prices for vessels standing at historical highs. Starting from January 2026, the five-year charter prices for VLCCs have surpassed those of new ships, indicating a significant market optimism towards the spot market. Demand: Global oil trade restructuring, replenishment demand combined with increased production, and strong potential demand. The 2026 US-Israel-Iran conflict has led to a restructuring of global oil trade routes. The closure of the Strait of Hormuz has resulted in severe supply disruptions, causing crude oil import demand to gradually shift towards the Atlantic market. During this time, the emergency release of strategic petroleum reserves by the US and increased oil production from American countries have supported continued strong shipments from the US Gulf; due to the shipping distance from the US Gulf to Asia being 2.6 times greater than that from the Middle East to Asia, market ton-mile demand has been significantly elevated. China and OECD countries have relatively low inventories, indicating substantial replenishment potential. The disruption of Middle Eastern supplies has led to a rapid decline in inventories across oil-importing countries. Overall, oil consumption remains at a normal level, with marginal demand exhibiting stability. To ensure stability on the consumption side, the replenishment demand from various countries may continue to materialize. Continuous increase in oil production may be a long-term positive. OPEC+ has lifted 2.2 million barrels per day in production cuts and partially lifted 1.65 million barrels per day in production cuts from October to December 2025 and in May 2026; there is still a potential for 3.033 million barrels per day to be released from production cuts in the future, which is expected to continue supporting crude oil transportation demand, although the actual effects of production increases will need to be observed. According to the EIA forecast, non-OECD+ countries will increase production by 1.2 million barrels per day in 2026, with the US, Brazil, Guyana, and Canada leading the way in production growth, driving an increase in oil shipping ton-mile demand. Supply: A significant increase in orders on hand, but a serious aging of the active fleet, with an increased share for leading companies. A significant increase in orders on hand: In response to the crisis in the Red Sea leading to tight shipping capacity and the previous peak season catalyzing new orders, there has been a concentrated signing of new orders from Q1 to Q2 2024 and from Q4 2025 to Q1 2026, resulting in current orders for VLCC/Suezmax/Aframax representing 31.8%/29.3%/7.2% of their respective capacities, which is relatively high compared to recent years. Due to tight shipyard capacity and delayed schedules, deliveries are expected to be concentrated between 2027-2029. As of July 2026, the current ratio of oil tanker orders to fleet capacity is 24.8%, an increase of 0.3 percentage points from the previous month, marking a historical high since 2015. The current crude oil fleet is seriously aging: Crude oil tankers/VLCCs more than 20 years old account for 22.9% and 21.1% respectively, posing significant operational pressure; the next few years will see the concentrated aging of vessels delivered between 2009 and 2012, exacerbating scrapping pressure. The recent rapid increase in orders on hand may alleviate this potential threat. Oligopoly control combined with intensified sanctions is worsening supply tension. The top ten VLCC shipowners globally control a total of 404 vessels, accounting for 42% of the global fleet size, indicating an unprecedented industry concentration. The supply side is artificially locked, raising the profit margins for freight rates; the proportion of sanctioned crude oil tankers is rapidly increasing, while the efficiency of the shadow/sanctioned fleet is low, leading to a potential decrease in supply. Risk Warning Global oil consumption recovery may fall short of expectations, resulting in decreased oil shipping demand; geopolitical risks; calculation deviation risks, etc.