1. Report Industry Investment Rating No relevant information provided. 2. Core Viewpoints - The crude - tanker market in 2025 was strong but recently had a sharp correction. The Middle - East–Far East TD3C route's daily rent averaged $57,500, up 64.7% YoY, and seaborne crude demand grew solidly. The supply of the tanker fleet was tight, and sanctions and floating storage were short - term swing factors. The global crude - tanker capacity rose only 0.7%. Mid - term supply is expected to remain tight, with sanctions and storage adding near - term tension. The Venezuelan affair is a short - term negative, but geopolitical risk premium underpins freight fundamentals [1][3]. - The 2026 outlook for the crude - tanker market is volatile but still tilted to the upside. Although freight rates have corrected sharply, global liftings should rebound after the Middle - East Ramadan, and tonnage scarcity due to sanctions will persist. Geopolitical flare - ups can increase market volatility [2][3]. 3. Summary by Directory 3.1 Market Review - The crude - tanker market soared in 2025H2 and then quickly retreated. The average annual daily hire rate still showed a sharp year - on - year increase. Since September 2025, the market was exceptionally strong, with daily rates peaking at $141,300/day. In 2025, the average VLCC daily charter rate on the Middle East–Far East TD3C route reached $57,491, up 64.7% year - on - year. Since Q4, the market was robust but has fallen rapidly lately. In early January, the VLCC downtrend continued, sliding 36.5% week - on - week, and Suezmax and Aframax rates also turned lower [9][34]. 3.2 Demand - Seaborne crude demand in 2026 is expected to be slightly stronger than in 2025, with global volumes reaching a high - level plateau. In 2025, global crude shipped by sea reached 2.17 billion tonnes, up 4.2% year - on - year. OPEC+ indicated that Q1 2026 output will be flat. The Ukraine conflict has had a limited net impact on Russian crude exports. South American shipments grew 6.1% in 2025, while North America and Africa had modest gains. China's crude - import demand picked up in H2 2025 [12][37]. - Venezuelan exports may face short - term disruptions. In the first eleven months of 2025, Venezuela's crude output stood at 0.93 mb/d, about 0.9% of global supply. Average seaborne exports in 2025 were roughly 0.75 mb/d, equal to 1.7% of world crude trade. China and the US are the main destinations, taking about 50% and 15% respectively. Since Q4 2025, the US has tightened sanctions on Venezuelan oil [13][37]. 3.3 Supply 3.3.1 Fleet Growth and Aging - In 2025, the global crude - tanker fleet grew only 0.7%, and the average age of VLCC reached 13.29 years old. Owners are cautious about ordering new ships due to the net - zero timetable. There are currently 909 VLCCs, totaling 280 million dwt, with 156 on order (17.2% of existing capacity), but near - term deliveries are limited. About one - third of VLCC tonnage is over 15 years old, and the average age will keep rising, reducing fleet productivity [14][38]. 3.3.2 Sanctioned Tanker Fleet and Floating - Storage Tonnage - The share of sanctioned tonnage is approaching 20%. In 2025, the US and EU tightened measures on ships carrying Russian, Venezuelan, or Iranian oil. As of 15 Dec 2025, 1,746 ships were on sanctions lists, with tankers being the dominant segment. The US has shifted from corporate to individual/entity designations, making penalties more precise [18][40]. - Floating storage has fluctuated. A build - up in October lifted spot rates in November, but the total has since fallen back. The global floating - storage count peaked around Week 50, declined into year - end, and edged up again in early January. Far - East floating stocks remain elevated, but the support to freight from stored barrels is waning. Part of Venezuela's output is held afloat, and floating - storage levels should be closely watched in 2026. If crude prices retreat, more tankers could be used for storage, boosting freight rates [19][20][40]. 3.3.3 Ship Speed and Canal Transit - The fleet sailed faster in Q4. The average VLCC speed reached 11.86 kn in December, rising steadily since mid - year, while Aframax speed averaged 10.82 kn, remaining flat. Higher rates encouraged owners to turn ships faster, releasing extra supply, but speeds have edged back recently [23][45]. - Ship volumes passing through the Suez Canal remain low, while Panama Canal traffic is normal. In 2025, the Panama Canal had an average of 85 tanker transits (8.92 million dwt) per month, back to 2023 levels but below 2022. Crude - tanker passages in the Suez Canal totaled 1,950 ships in 2025, down 9.7% vs 2024 and 35.1% vs 2023. If tankers return to the Suez Canal in 2026, it could weigh on freight and cut overall tonne - mile demand [24][45]. 3.4 Venezuela Situation 3.4.1 Shipping Pattern - Venezuelan exports are mainly transported by VLCCs, and 120 tankers regularly call at the country's ports. State - owned PDVSA is the major exporter, shipping from the northern and eastern terminals. These 120 vessels represent 6.3% of the world VLCC fleet, 1.0% of Suezmaxes, 2.0% of Aframaxes, and 2.6% of Panamaxes. Most cargoes go to the Far East, so VLCCs dominate the trade [25][26][46]. 3.4.2 Market Impact - The tanker market will suffer in the short term, but there is uncertainty about the floating capacity and volume. The immediate fall in Venezuelan liftings cuts long - haul VLCC demand, which is a short - term negative. Replacement barrels will come from the Middle East, West Africa, or South America, slightly shortening average hauls. However, the effective shortage of tonnage due to sanctions remains, and the market's risk premium and tight supply fundamentals are intact [30][49]. 3.5 Outlook - Seaborne crude demand is expected to grow steadily. In 2026, global volumes should remain at a high level. OPEC+ output is flat in the near term, and Russian flows are only marginally affected. West - African and North - American liftings have eased seasonally, causing a short lull. The pace of Venezuela's crude/fuel - oil comeback is unclear. High onshore stocks in China and a weaker products crack are slowing import appetite, leading to less spot cargo and downward pressure on freight. Global seaborne - crude growth in 2026 is projected at 1–2%. - Supply is likely to stay tight. The share of sanctioned tonnage is rising, floating storage is increasing, and Ukraine has stepped up strikes on Russian tankers. Fleet growth is minimal, and ageing is reducing operating efficiency. Even if the Russia–Ukraine war ends in 2026, trade - flow shifts will largely persist. A sharper oil - price retreat would increase storage demand and tighten tanker availability further. - In summary, the market will dip in the near term, but 2026 fundamentals remain strong. The Venezuelan affair has reduced long - haul VLCC demand for now, but the timing of volume rebound and its impact on floating storage are uncertain, leaving a geopolitical risk premium. The crude - tanker market is expected to regain strength around March after the current correction [31][32][50].

Core Viewpoint - The stock of China Cosco Shipping Energy Transportation Co., Ltd. (01138) has seen a significant increase, attributed to ongoing geopolitical tensions affecting oil tanker operations in international waters near Venezuela [1]. Group 1: Company Performance - China Cosco Shipping Energy's stock rose over 5% in the afternoon trading session, with a current price of 10.08 HKD and a trading volume of 136 million HKD [1]. Group 2: Industry Insights - The U.S. Coast Guard is intercepting oil tankers, including the "Bella 1," in international waters near Venezuela, marking the third such interception recently [1]. - Morgan Stanley's research indicates that while concerns about shipping disruptions may gradually diminish, oil tanker profitability is expected to remain resilient next year [1]. - Over 20% of the global oil tanker fleet is over 20 years old, with many vessels concentrated in the "shadow fleet," limiting their ability to participate in compliant trade [1]. - Geopolitical tensions are driving up demand for oil transportation, with approximately 18% to 20% of the global fleet engaged in non-compliant transportation due to sanctions on vessels from Russia, Iran, and Venezuela [1].

Core Viewpoint - COSCO Shipping Energy (中远海能) shares rose over 5%, currently trading at 10.08 HKD with a transaction volume of 136 million HKD, amid reports of the U.S. Coast Guard intercepting the "Bella 1" oil tanker near Venezuela, marking the third such interception in recent times [1] Group 1: Market Dynamics - J.P. Morgan's research indicates that while concerns over existing shipping disruptions may gradually diminish, they expect oil tanker profitability to remain resilient next year [1] - Over 20% of the global oil tanker fleet is over 20 years old, with a significant portion concentrated in the "shadow fleet," limiting their ability to participate in compliant trade [1] - Geopolitical tensions are further driving up transportation demand, with sanctions on vessels from Russia, Iran, and Venezuela expanding, leading to approximately 18% to 20% of the fleet engaging in non-compliant transportation [1]

Group 1 - The core viewpoint of the article highlights that COSCO Shipping Energy (01138) has seen a significant stock price increase of 6.34%, reaching HKD 7.71, with a trading volume of HKD 80.81 million [1] - Eight OPEC+ countries are set to hold an online meeting to decide on oil production for October, with potential plans to withdraw approximately 1.65 million barrels per day from production cuts, which represents 1.6% of global demand, ahead of the original schedule by over a year [1] - Huayuan Securities anticipates a notable improvement in the oil transportation market's outlook by Q4 2025 due to the accelerated increase in OPEC+ production [1] Group 2 - Bank of America Securities reports that COSCO Shipping Energy's operational performance in the first half of the year met expectations, with net profit exceeding forecasts primarily due to one-time gains [1] - The bank has raised its profit forecasts for 2025 to 2027, reflecting the favorable conditions for the crude oil tanker market resulting from OPEC+ production increases and tightening U.S. sanctions [1] - The bank maintains a "Buy" rating on the company, viewing it as a major beneficiary of the tanker market recovery, and believes that the current valuation does not fully reflect the expected return on equity for shareholders in 2025 to 2026 [1]

Group 1 - Zhongyuan Shipping (01138) saw a stock increase of over 6%, reaching HKD 7.71 with a trading volume of HKD 80.81 million [1] - Eight OPEC+ countries are set to hold an online meeting to decide on October's oil production, with potential plans to withdraw approximately 1.65 million barrels per day from current cuts, equating to 1.6% of global demand, ahead of the original schedule by over a year [1] - Huayuan Securities anticipates a significant improvement in the oil shipping market's outlook by Q4 2025 due to the acceleration of OPEC+ production increases [1] Group 2 - Bank of America reported that Zhongyuan Shipping's operational performance in the first half of the year met expectations, with net profit exceeding forecasts primarily due to one-time gains [1] - The bank has raised its profit forecasts for 2025 to 2027, reflecting favorable conditions for the crude oil tanker market due to OPEC+ production increases and tightening U.S. sanctions [1] - The bank maintains a "buy" rating, suggesting that Zhongyuan Shipping will be a major beneficiary of the tanker market recovery, and believes that the current valuation does not fully reflect the expected shareholder return rates for 2025 to 2026 [1]

Core Viewpoint - Bank of America Securities reports that China Merchants Energy Shipping Company (600026)(01138) performed in line with expectations in the first half of the year, with net profit exceeding expectations mainly due to one-time gains [1] Financial Performance - The company has adjusted its earnings forecasts for 2025 to 2027, reflecting the positive impact of OPEC+ production increases and tightening U.S. sanctions on the crude oil tanker market [1] - The target price for H-shares has been raised from HKD 7.5 to HKD 7.9, while the target price for A-shares (600026.SH) has been increased from RMB 13 to RMB 13.6 [1] Investment Outlook - The firm maintains a "Buy" rating, believing that the company will be a major beneficiary of the recovery in the tanker market [1] - The current valuation is seen as not fully reflecting the return on equity (ROE) prospects for shareholders in 2025 to 2026 [1]