Crude Tanker Market Booming Beyond The Winter Surge

In this episode of Capital Link's Shipping Sector Webinar Series, we welcomed  Mr. Svein Moxnes Harfjeld, President & CEO of DHT Holdings, Inc. (NYSE:DHT), Mr. Lars Barstad, CEO of Frontline Management AS (NYSE:FRO) (OSLO: FRO), Dr. Nikolas P. Tsakos, Founder & CEO of TEN Ltd. (NYSE:TEN), and Mr. Mikkel Seidelin, CCO at Teekay Tankers Ltd. (NYSE:TNK). The webinar moderated by Mr. Jorgen Lian, Head of Shipping Equity Research at DNB Carnegie delivered an in-depth assessment of the crude tanker market, highlighting favorable industry fundamentals and compelling earnings visibility for investors.

To watch the full discussion please visit the following link:

https://www.youtube.com/watch?v=iHktvRF2fNM

Strong Freight Rates Signal Structural Strength

The crude tanker market is currently experiencing a period of exceptional strength, characterized by sustained firmness rather than short-lived rate spikes. As noted by Mr. Barstad, the current activity levels reflect a fundamentally different market environment.

"We have had 23 days where the Baltic Index has printed north of $100,000 per day. The last time that happened was in 2020, and prior to that, you had to go back to 2008," he observed. More importantly, this performance is supported by a volume of $110,000 – $120,000 per day.

The rally, initially led by VLCCs, is now having an effect across all vessel classes. Mr. Seidelin stressed that  the independent strength of the VLCC segment has, in turn, lifted Suezmax earnings as well, marking a reversal from recent years when mid-sized vessels were primary market drivers. The fact that the VLCCs are moving on their own has, as a result, strengthened Suezmaxes as well. That is a reversal from recent years where mid-sized vessels led the market. Dr. Tsakos reinforced the constructive outlook, confirming that the positive momentum is evident across the full tanker spectrum. As TEN operates a diversified fleet across crude, product and LNG tankers, he stated that improving rate dynamics are evident even in smaller vessel classes, underscoring that elevated VLCC earnings are lifting the entire market. While volatility remains inherent, he stressed that the current environment rests on a solid base.

Market Catalysts: Sanctions and the Shadow Fleet

Recent U.S. actions targeting vessels linked to Venezuela trade, were discussed as part of a broader trend. Mr. Barstad viewed this as constructive for the market over the longer term, noting that they signal a renewed effort to address sanctioned oil flows. He commented that sanctioned crude is increasingly struggling to find viable outlets, forcing market participants toward compliant barrels. "Eventually incremental growth from sanctioned countries is going to stop, and then we’re back to the compliant market supplying the marginal barrel," he explained. This ties directly to the role of the shadow fleet which, the panel broadly agreed, is estimated to be not only substantial, but also inefficient and largely isolated from the mainstream tanker market. Mr. Harfjeld pointed out that, "a VLCC today carrying sanctioned oil may complete one, and at best two, cargoes per year."  As a result, potential removal or reintegration was viewed as far less of a threat than is commonly perceived.

Dr. Tsakos supported this view, noting that much of the shadow fleet operates with extremely low utilization and remains structurally detached from the compliant market.

Structural Supply and Demand Dynamics Support a Long Cycle

On the supply side, the order book remains constrained, reflecting ongoing shipyard congestion and the lingering effects of prolonged industry uncertainty, while the existing global fleet continues to age rapidly. Mr. Seidelin elaborated that the practical scrapping age has shifted from 15 to approximately 20 years; however, extending vessel life meaningfully beyond 20 years remains difficult within mainstream commercial trading. This profile acts as a natural release valve, capping downside as older ships exit during weaker periods.

Dr. Tsakos observed that the tanker sector has undergone a meaningful structural shift. Years of uncertainty around environmental regulation and propulsion technology have restrained speculative ordering, while increasing consolidation among publicly listed companies has introduced greater discipline and internal checks. This evolution, he argued, supports a more industrial shipping model and reinforces the durability of the current cycle.

Capital Allocation: Dividends, Renewal, and Market Valuation

As companies continue to generate substantial cash flows, capital allocation strategies are gaining momentum. Mr. Harfjeld outlined DHT's strategy centered on dividends, opportunistic vessel investments, share buybacks, and ongoing balance sheet strengthening, an approach he credited for market credibility and supporting a premium valuation.

Dr. Tsakos emphasized that established shipping companies with long-term business models should be evaluated primarily on earnings-based metrics rather than solely on NAV. Noting that TEN is "trading at two times EBITDA," he urged analysts to assess the sector more like an industrial business and less as floating real estate.

Nevertheless, the panelists broadly agreed that ordering new vessels today requires a high degree of caution due to elevated newbuilding prices and extended delivery timelines. Dr. Tsakos affirmed that a VLCC in 2028-29 would require a long-term rate of approximately $60,000 per day to justify the investment. Mr. Barstad added that while confidence in the market is clearly growing, spot rate strength has only recently begun to lift asset values, reinforcing the need for a measured and disciplined approach to new investment decisions.

Disclosure: Capital Link is the investor relations advisor to TEN Ltd. This content is for informational purposes only and not intended to be investing advice. The article includes statements made by company management during the sector webinar.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.