This report does not constitute a rating action. Geopolitical turmoil is forcing longer, more circuitous crude tanker voyages, driving a massive increase in ton-mile demand and multivessel transport through high-risk regions. This shift is absorbing ship capacity and fueling an unprecedented surge in tanker freight rates, despite sluggish oil demand, adding another impulse to inflation pressures globally. With the disruption in the Middle-East continuing well into 2027, as we assume, this tanker rate surge could trigger a prolonged wave of newbuilding orders, with targeted deliveries in the late 2020s, oversupply, and falling rates if current ton-mile tailwinds recede. Oil demand and fleet size are no longer the primary determinants of tanker profitability. Historically, rising oil consumption lifted freight rates, while
