CITIC Securities: The underlying logic of the oil shipping industry has changed, and the inventory ratchet effect has become a core feature.

CITIC Securities Research Report pointed out that the underlying logic of the oil industry has changed, and the inventory ratchet effect has become a core feature. Under the risk of geopolitical supply chain disruption, countries are reevaluating their energy security bottom line, pushing up the red line of safety stock goals, and it is difficult to fall back to pre-crisis levels, breaking the previous low inventory, high turnover lean operation model. Oil-producing countries tightening exports temporarily suppress freight rates, but actually force importing countries to enter the alert zone for inventory. Although the tightening of crude oil exports in multiple countries has led to a temporary pullback in freight rates, it continues to push the available inventory of overseas consuming countries towards the safety alert zone. Chain anxiety has led to additional replenishment demand, which will concentrate and release as the core catalyst for freight rates to rise. In addition to regular replenishment, overseas terminals will also build up high water level safety buffer inventory. The combined replenishment demand of the two will drive a substantial increase in oil transportation prices if released during policy relaxation or peak season.