The Zhitong Finance App learned that CITIC Securities released a research report saying that the oil transportation sector's boom continued to rise, and crude oil and refined oil prices continued to rise during the holiday season. Oil exports from the Strait of Hormuz have returned to pre-war levels. The massive increase in pallets compounded the continued loss of VLCC's effective capacity due to factors such as ship-to-ship transfers and ship damage, and the gap between supply and demand cannot be matched. At the same time, Saudi Arabia's expansion of subsidies stimulates pallets, and high cracking price spreads support refiners' procurement intentions. The G7 released strategic reserves to drive the transportation of refined oil products to an inflection point. The upward trend in freight rates is sufficient, and the upward trend may rise further after the holidays. The 4Q26 tanker leader's valuation and profit are expected to reach record highs.
CITIC Securities's main views are as follows:
Crude oil and refined oil freight rates remained upward during the holiday season, strait oil exports returned to pre-war levels, capacity losses increased compounded by demand support, and freight rates may rise further after the holidays.
According to Clarksons, for the week ending October 2, 2026, VLCC/ Suezmax/ Aframax TCE increased 10.0%/73.3%/8.4% from the previous week to $653,424/611,543/265,286/day, respectively. Demand for VLCC began to spill out, and Suez freight rates increased dramatically. While Dark Air and STS activities continued to be active, they also boosted a rapid recovery in crude oil exports from the Strait of Hormuz. According to Kpler data, at the end of September, Middle Eastern oil exports (excluding exports from Iran) surpassed 18 million barrels/day for the first time in a row for several days. Furthermore, STS's non-traditional operations led to a spiral rise in VLCC's effective capacity loss. The massive increase in pallets and a limited list of usable ships drove VLCC freight rates to continue to rise and further fed back into the rental market due. According to Clarksons, for the week ending October 2, 2026, the ECO VLCC one-year lease rose to $265,000 per day, up 101.9% from the end of August 2026. The doubling of freight rates in the rental market further showed expectations of the level of ship tension within the industry. As the frequency of attacks on ships in the strait increased during the holiday period, capacity losses were further amplified, and freight rates may rise further after the holiday.
Expanding distribution stimulates pallets, and STS transit is currently the main delivery method. Massive growth in pallets and continued loss of effective capacity are driving up VLCC freight rates.
According to the Financial Federation, on October 5, Saudi Aramco set the official sales price (OSP) of Arabian light crude oil sold to Asia in November at 5 US dollars/barrel lower than the average price in Oman/Dubai. Discounted sales will further increase attractiveness to downstream buyers, and have become the main means for oil producing countries in the Gulf. According to Xinhua News Agency, the Iraqi oil tanker company confirmed on the 3rd that it has used a large tanker to transport 2 million barrels of crude oil out of the Strait of Hormuz and deliver it to buyers waiting outside the strait. This is the first time in decades that the company has delivered through this method. Currently, STS transit has become the main delivery method for exports from oil-producing countries in the Gulf, but as a non-traditional handling operation and actual shuttle tanker capacity limit, STS causes continuous expansion of VLCC effective capacity losses and resonates with pallet growth stimulated by water distribution sales and high cracking price differences, which is the core reason for the recent rise in VLCC freight rates. Against the backdrop that the cracking price spread cannot be quickly narrowed, along with the increase in the frequency of ship attacks, difficulties in repairing damaged ships, and further damage to effective capacity, the upward momentum of VLCC freight rates is still sufficient, and VLCC freight rates may rise further after the holidays.
Demand side procurement momentum is still sufficient, and the cracking price spread is expected to remain high. The G7 has begun to further release strategic oil reserves, and transportation of refined oil products has reached an inflection point.
Demand side procurement momentum is still sufficient. On the one hand, high cracking price spreads provide sufficient profit margins for refineries. In line with discounted sales in Shangwan, refiners' willingness to purchase is increasing. Considering the continuation of Russia's ban on the export of refined oil products, refineries have been attacked, Middle East refined oil exports are plagued by the strait blockade, and the cracking price spread is expected to remain high. On the other hand, energy procurement is gradually shifting from prioritizing cost performance to prioritizing stability. To ease the pressure brought about by rising diesel prices, according to CCTV news, on October 2, 2026, the French presidential palace, the Elysée Palace, issued a statement on the same day saying that G7 member countries will release 100 million barrels of strategic oil reserves in coordination with the International Energy Agency for a period of 4 months. The first 20 days will centrally release diesel reserves (corresponding to 820,000 barrels per day). If the total amount of diesel released in the first 20 days is about 16.4 million barrels. Europe is expected to actively seek alternative sources for imported refined oil products during the storage release process. Seasonal rigid demand is compounded by increased flight distance due to changes in trade flow, and transportation of refined oil products is expected to reach an inflection point. Since August 20, the spiral rise in effective capacity loss and the pressure on the transportation side due to the resonance of pallet volume in the Middle East continue to be interpreted as a core contradiction. Companies with more flexible operating mechanisms and better fleet structures are expected to be the first to benefit. The 4Q26 tanker leader's valuation and profit are expected to reach record highs.
Risk factors:
The operating rate of the refinery was lower than expected, the impact of the geographical conflict exceeded expectations, and the cracking price spread fell rapidly.