CITIC Securities: Short-term uncertainty is expected to drive oil shipping prices higher.

Citic Securities research report states that the blockade of the Strait of Hormuz will reshape the energy landscape. According to data from Kpler, it is expected that about 10 oil tankers will stop at Yanbu port, alleviating concerns of oversupply, and it is estimated that the number of VLCCs will further increase. The shipping distance from Yanbu Port/Hormuz Strait to Qingdao Port will increase by about 18%. Considering the shipping capacity of Yanbu Port and Fujairah Port, the demand gap is seeking to be filled by the Gulf of Mexico, thus further increasing the shipping distance by more than 30%. In the short term, releasing strategic reserves and adjusting the supply chain to offset the geopolitical impact of the US-Iran conflict is a temporary solution, but the partial restoration of the Strait of Hormuz passage capacity remains the key. After the embargo is lifted, compensatory demand is expected to keep oil tanker transportation at high rates, and if vessel utilization is limited, freight rates are expected to rise further. The historical improvement in VLCC capacity concentration is being reshaped, with pricing mechanisms being redefined. On one hand, the "quasi-alliance" enhances shipowner bargaining power, while a quasi-alliance formed by Sinokor, MSC, and Trafigura further improves the ability of the alliance to expand capacity with rental surplus, with the concentration expected to further increase. Short-term uncertainty is expected to drive freight rates up, maintaining expectations for record profits for oil tanker leaders by 2026.