CMSC: The future multiple positive factors are still continuously being realized. It is recommended to pay attention to the elasticity of the oil tanker industry.

CMSC released a research report stating that in the short term, the US-Iran negotiations are deadlocked, military deployments are escalating, and the risk premium is rising. In the medium to long term, there is a shift in power between new and old forces, and the global geopolitical situation is becoming more chaotic. The demand for compliant oil transportation market is expected to be concentrated, and in the short to medium term, industry supply cannot be met in a timely manner. Leading players may rapidly increase market share or change industry pricing logic, and it is recommended to pay attention to COSCO Shipping Energy Transportation (600026.SH, 01138) and Nanjing Tanker Corporation (601975.SH). CMSC's main points are as follows: At the beginning of 26, freight rates continued to climb, and time charter rates reached a new high As of February 23, VLCC Middle East freight rates were $176,000/day, showing a surge in rates. By the end of February, ship owners expressed a strong willingness to hold prices as the US-Iran negotiations remained unresolved and the risk in the Strait of Hormuz maintained strong freight rates. Time charter rates also accelerated upwards, with the current 6-month charter (Eco-type VLCC) reaching $120,000+, and a one-year charter increasing to around $90-100,000. Short-term US-Iran deadlock, medium to long-term geopolitical chaos may deepen On February 17th, the second round of indirect US-Iran negotiations broke down. The United States is expected to form a double aircraft carrier battle group and deploy a large number of fixed-wing aircraft towards the Middle East. Iran, on February 16, conducted live-fire exercises in the Strait of Hormuz, deterring global oil shipping routes. Looking ahead: 1) Iran does not compromise on ballistic missile issues, increasing the likelihood of precise US strikes to push negotiations. 2) If Iran compromises, its Iranian black oil channels will be cut off by the United States. 3) Israel strongly opposes the US-Iran agreement and may take unilateral actions to disrupt the regional situation. Therefore, in various scenarios, there are favorable factors for the tanker industry. 4) From 26-28, there may be a shift in power between new and old forces, and the level of geopolitical confusion may deepen. Europe and the US continue to increase sanctions on Iranian and Russian-related vessels In early February 26, the European Union proposed the 20th round of sanctions against Russia, imposing a comprehensive ban on maritime services for Russian crude oil (lifting the limit on Russian oil prices, and some European ship owners (about 18.5%) need to shift to long-distance compliant transportation). As of February 23, the number of sanctioned VLCCs was 154, accounting for 16.87% of global capacity, an increase of 0.3% from the end of January. Currently, with the continuous increase in sanctions by Europe and the US, it is expected that the operating difficulties of private shadow ship owners will increase, and some poorly conditioned vessels may exit the market. SINOKOR acquires a large number of ships, industry concentration increases, pricing ability improves SINOKOR's core business covers the three major sectors of tankers, containers, and bulk cargo. Due to its optimism about the VLCC market, it sold its fleet to MSC and obtained billions of dollars to expand its VLCC scale. From December to January, a total of 54 second-hand VLCC ships were traded, and most of them are expected to be acquired by SINOKOR. When all ships are delivered, SINOKOR will control a total of 118 VLCCs, accounting for about 16% of compliant capacity. Industry insiders predict that market share could continue to increase to 25%. By then, ship owners partnering with traders may change the industry's pricing logic. The industry's supply-demand pattern continues to improve In terms of demand, it is expected to benefit from the resumption of production in the Middle East, as well as increased production from new sources in South America and West Africa, while mainstream countries shift their imports to compliant markets. Overall, global crude oil tonne-mile demand is expected to increase by 1.5%/1.7% in 26-27. In particular, attention should be paid to the continuous release of demand in the compliant market: 1) Russo-Indian trade continues to shrink, which may bring about an increase of tens of thousands of barrels per day of compliant oil, with increased sailing distances; 2) If Iran compromises with the US and halts black oil trade, it may lead to a shift of over 100,000 barrels per day of compliant oil. In terms of supply, it is expected that the growth rate of crude oil tanker supply in 26/27 will be about 2.8%/4.3%, with VLCCs at 2.8%/4.9%. However, there are currently 19% of crude oil tankers under sanction, approximately 17% of VLCCs under sanction, and it is expected that over 60% of vessels are over 20 years old, so the industry's new supply is still very insufficient. Risk factors: Significant easing of geopolitical risks, temporary halt in Middle East production, insufficient domestic demand, etc.