GTHT released a research report stating that oil tanker market sentiment has recovered in the first half of 2025, with VLCC TCE rates on the Middle East-China route exceeding $40,000/day during the Q2 off-season, leading to significantly narrower year-over-year declines in oil tanker companies' Q2 earnings. Q3 profits are expected to reach a two-year high, with strong Q4 peak season performance anticipated. Based on Baltic Exchange indices, GTHT expects Q3 2025 crude tanker profits to potentially hit the highest levels for the same period in the past two years. Additionally, the firm estimates that oil tanker supply-demand dynamics will continue to improve, with market conditions expected to exceed expectations while benefiting from oil price decline options. The risk-reward profile has become attractive again.
GTHT's main viewpoints are as follows:
**First Half 2025 Oil Tanker Market Recovery, Q3 Profits to Hit Two-Year High**
The oil tanker market faced pressure tests in the second half of 2024 due to geopolitical oil price volatility and Iranian production increases. Since 2025, oil tanker market conditions have clearly recovered, with Q2 off-season VLCC TCE rates on the Middle East-China route exceeding $40,000/day, causing oil tanker companies' Q2 earnings to show significantly narrower year-over-year declines.
1) Oil price center has declined. Oil price determination logic has gradually shifted from geopolitical dominance back to supply-demand fundamentals, with OPEC+ production increases accelerating the decline in oil price centers, supporting refinery operation recovery and trade restoration.
2) Iran sanctions escalation. The United States has intensified sanctions on Iran, particularly tightening sanctions on related shadow fleets, helping improve supply-demand dynamics in the compliant tanker market.
While oil tanker companies' first half 2025 earnings generally declined year-over-year due to high base effects, it's worth noting that crude tanker profits have risen quarter-over-quarter for two consecutive quarters. Based on Baltic Exchange indices, GTHT expects Q3 2025 crude tanker profits to potentially reach the highest levels for the same period in the past two years.
**Oil Tanker Long-term Logic: Benefiting from Global Crude Production Increases, Second Half Production Benefits May Gradually Materialize**
The Russia-Ukraine conflict that began in early 2022 initiated a global oil trade restructuring, with Russia-Europe "seeking distant over near" driving longer tanker voyage distances and demand increases exceeding 10%, boosting oil tanker market conditions. Short-term factors have dominated market fluctuations over the past year, with GTHT estimating that current oil tanker capacity utilization may have recovered to threshold levels. The firm expects oil tanker supply-demand dynamics to continue improving in coming years, with market conditions potentially exceeding expectations.
1) Supply rigidity continues. Tanker fleets face the most severe aging issues, with currently limited orderbooks and shipowners showing insufficient willingness to place large-scale orders. Combined with tightening environmental regulations and shadow fleet sanctions, supply is expected to remain relatively rigid in coming years. If the gray market contracts significantly, it may trigger a wave of old vessel scrapping.
2) Crude production increases drive demand growth. OPEC+ began production increases in April 2025, signaling that global crude supply has entered a production increase cycle from a production cut cycle. GTHT believes crude production increases benefit oil tanker demand growth, with oil price declines ensuring production increase plans translate into crude export growth and tanker demand growth.
The production increase benefits did not materialize as expected in the first half of 2025, due to Middle Eastern production increases being offset by domestic consumption and U.S. Gulf exports shifting to Europe, causing voyage distances to shorten by over 1%. Considering the end of Middle Eastern domestic consumption peak season leading to export increases and South American long-haul route production increases, plus OPEC+ recently discussing potential new rounds of production increases, GTHT expects second half production benefits to begin gradually materializing, ensuring continued oil tanker demand growth.
**Oil Tanker Short-term Logic: Russia Sanctions Benefit Compliant VLCCs, Q4 Peak Season Worth Anticipating**
Q4 is the traditional oil tanker peak season and may catalyze optimistic expectations for oil tanker long-term logic, though the past two years have seen lackluster peak seasons. Since August 2025, oil tanker rates have trended upward, with recent VLCC TCE jumping to over $60,000, drawing market attention.
In Q3 2025, Europe and the United States intensified sanctions on Russia and implemented secondary sanctions on India. According to Kpler, over the past three years, India's crude imports from Russia rose to nearly 40% while reducing Middle Eastern and West African imports. Since the August 2025 secondary sanctions, India's Russian imports have contracted by over 10%, while Middle Eastern imports and U.S. Gulf long-haul imports have grown, driving improved supply-demand dynamics for compliant VLCCs.
Currently, oil tanker capacity utilization is at threshold levels, and GTHT believes Russia sanctions and production increase benefits will support peak season performance, with industry participants optimistically anticipating developments.
**Risk Warnings:** Economic volatility risks, geopolitical situations, oil price risks, safety accidents, etc.