COSCO SHIP ENGY (01138) saw its share price jump by more than 4% during the trading session before paring gains to a 2.60% rise at HK$19.35 at the time of writing, with turnover reaching HK$450 million.

According to market reports, the blockade of the Strait of Hormuz has now entered its seventh month. Middle Eastern oil-producing nations have been maintaining crude exports through a ship-to-ship (STS) transshipment system, which has led to increased vessel waiting times and longer turnaround periods, thereby reducing the number of operational voyages available.

Freight rates for the Middle East-to-China route have hit unprecedented levels. On September 15, the TCE for the TD3C route from the Middle East Gulf to China reached US$1.099 million per day, marking an increase of more than 50% from approximately US$700,000 per day at the start of September. The following day, the composite index for China's crude oil import freight rates stood at 14,575.03 points, up roughly 83% from the beginning of the month.

According to Everbright Securities, the restricted passage through the strait, added transshipment procedures, and rerouting of certain shipping lanes are all reducing fleet turnover efficiency. With geopolitical risks yet to subside in the near term, combined with the seasonal uptick in crude oil transportation demand in the fourth quarter, VLCC freight rates are expected to remain elevated. The brokerage recommends focusing on COSCO SHIP ENGY and China Merchants Energy Shipping, which have a relatively high share of tanker capacity and stand to benefit from rising freight rates.