Guotai Haitong Securities has released a research report indicating that despite three distinct phases of Middle East geopolitical developments over the past six months, which reduced tanker demand, freight rate benchmarks have remained elevated. Dividend yields provide support for valuation floors, and recurring geopolitical turbulence does not alter the long-term thesis. The brokerage maintains an Overweight rating on the oil tanker sector, noting that a potential lifting of Iranian sanctions could create exceptionally strong and sustainable conditions for the compliant market.

Phase One (March to mid-June 2026: Strait of Hormuz closure) — Oil tanker demand contracted while regional disruptions drove freight rate benchmarks higher. Following the late-February US-Israel-Iran conflict, Iran promptly closed the Strait of Hormuz. Vessel transits through the strait fell by over 80%, and while Saudi exports via Yanbu surged nearly fourfold, total Middle East crude exports still dropped by more than half. Simultaneously, US Gulf and South American exports rose over 30%, and Russian oil production increased nearly 20% due to temporary sanction relief, yet these gains could not offset the Middle East shortfall. Estimated global seaborne crude volumes (in tonnes) contracted roughly 11% year-on-year, and longer voyage distances failed to reverse the decline in tanker demand measured in tonne-miles. War risk premiums, panic buying, and regional supply-demand dislocations drove an initial spike in freight rates, which later eased as disruptions subsided. Estimated Q2 results imply VLCC TCE earnings of $120,000–$140,000 per day, with China Merchants Energy Shipping's tanker profits surging 2.6 times year-on-year.

Phase Two (mid-June to early July 2026: brief strait reopening) — Middle East exports partially recovered while US Gulf shipments pulled back, with restocking demand not yet materializing. On June 17, the US and Iran reached a memorandum of understanding, briefly reopening the Strait of Hormuz and providing temporary relief for Iran. Vessel transits recovered to 50%, Yanbu exports stayed elevated, and Middle East crude exports returned to nearly 80% of pre-conflict levels. Meanwhile, oil prices fell sharply, and US Gulf exports quickly retreated to pre-conflict levels. During this phase, estimated global seaborne crude volumes contracted 5% year-on-year. Freight rates initially surged but then declined continuously, with the rate benchmark falling short of market expectations, likely due to a limited recovery window: 1) Restocking had not yet appeared. High oil prices and weak end-demand led to slower-than-expected inventory drawdowns, and the lack of a proper contango structure in oil prices dampened commercial restocking incentives. 2) The Iran relief effect also failed to materialize. Compliant shipowners worried about renewed geopolitical tensions and retroactive sanctions risk, so Iran continued operating in a grey-market mode.

Phase Three (mid-July 2026 to present: dual strait blockages) — Tanker demand contracted again, yet freight rate benchmarks held near one-year time charter levels. On July 12, Iran re-closed the Strait of Hormuz, causing vessel transits to plunge once more. On July 20, Houthi forces imposed a maritime blockade on Saudi Arabia, directly affecting Saudi crude exports from Yanbu via the Bab el-Mandeb Strait to Asia. Over recent weeks, some VLCCs have chosen to sail north through the Suez Canal and exit the Red Sea, then reroute around the Cape of Good Hope to reach Asia. This rerouting doubles the voyage distance for Saudi crude to Asia and doubles transport costs. Freight rates have rebounded amid this renewed geopolitical turbulence, but without the sharp spike seen in March. The brokerage attributes this to relatively limited regional supply-demand dislocations — over the past month, US Gulf production did not increase significantly, South America stayed stable, and Russian oil output even slipped slightly. The report estimates that global seaborne crude volumes have contracted by over 10% year-on-year in the past two weeks, again reducing tanker demand. However, shipowners are holding firm on pricing based on expectations of medium-term supply tightness, with VLCC main route TCE earnings still near the one-year time charter level of approximately $120,000 per day.

Geopolitical turbulence does not alter the long-term tanker thesis, and the sector maintains its Overweight rating. 1) Strait reopening remains the medium-term trend. The brokerage expects resumption of transit within the next six months. Should the strait reopen, tanker capacity utilization would return to pre-conflict highs, with controlled capacity in long-haul routes and restocking demand providing additional tailwinds. High profitability over the next two years appears assured, with COSCO Shipping Energy Transportation A-shares and China Merchants Energy Shipping offering dividend yields of 4–5%, and COSCO Shipping Energy Transportation H-shares near 8% — high dividends support valuation floors. 2) Watch for the "demand surprise" from Iran sanctions relief. If the US lifts sanctions on Iran, estimated compliant demand could rise by roughly 5%, with even higher increases in VLCC compliant demand, and this would not be a one-off pulse. Over the coming years, effective capacity in the compliant tanker market remains rigid, and this demand surprise could deliver exceptionally strong and sustainable prosperity for the compliant segment.

Key recommendations include COSCO Shipping Energy Transportation, China Merchants Energy Shipping, China Merchants Nanjing Oil Transportation, and CSSC (Hong Kong) Shipping. Risks include geopolitical developments and strait blockades, economic fluctuations and end-demand weakness, and safety incidents.