Core Viewpoint - Scorpio Tankers Inc. has signed letters of intent to construct two Very Large Crude Carriers (VLCCs) at a price of $128 million each, with expected deliveries in late 2028, reflecting a strong long-term outlook for the crude tanker market [1][3]. Company Developments - The company has sold 2,382,226 common shares of DHT Holdings Inc. at an average price of $13.25 per share, retaining ownership of 1,169,568 shares as of the press release date [2]. - Scorpio Tankers currently owns or finances 98 product tankers, including 38 LR2, 46 MR, and 14 Handymax tankers, with an average age of 9.6 years [3]. - The company has agreements to sell four MR and two LR2 product tankers, expected to close in Q4 2025 and Q1 2026, and has four MR newbuildings under construction for delivery in 2026 and 2027 [3]. Market Outlook - The CEO expressed confidence in the fundamentals of the crude tanker market, indicating that the newbuilding agreements are a strategic extension of the company's positive outlook [3].

Core Insights - Rising crude supply from OPEC+ and South America, along with increased longer-haul routes, has driven freight rates for very large crude carriers (VLCCs) to levels not seen in nearly three years [1][3] - VLCC rates on the Middle East-to-China route have recently surpassed $100,000 per day, marking the highest rates in almost three years [2] - The current spike in freight rates is attributed to favorable market fundamentals rather than geopolitical events, with increased supply from the Middle East and the Americas supporting the demand for long-distance shipments [3][6] Supply Dynamics - OPEC+ is increasing production, leading to a rise in shipments from the Middle East, while Saudi Arabia has reduced crude prices for Asia, further boosting flows to this key importing region [4] - Middle Eastern producers are expected to increase crude shipments following the summer months, during which many countries rely on direct crude burn for electricity [4] Market Structure - The global tanker fleet is divided between those complying with sanctions on Iran and Russia and those operating in the shadow fleet, which affects the overall supply of tankers available for crude transportation [5] - The spot rate for a VLCC on the Middle East to China route has reached at least $6.6 million, with daily rates for several chartered tankers hitting $100,000, reflecting strong demand for long-distance shipments [6]