Saudi Arabia's General Authority of Civil Aviation stated in a statement early on the 11th that King Khalid International Airport in the capital Riyadh was attacked on the 10th, causing 12 deaths and 309 injuries. U.S. President Trump also made a statement after the attack on the Saudi capital's airport on the 10th, but only said the United States might join Saudi Arabia's strikes against the Houthis, without making a clear commitment. The Iran conflict is reshaping the Middle East crude oil trade landscape, and combined with a severe shortage of fleet supply, very large crude carrier freight rates have soared to their highest level in sixty years - the cost of transporting a cargo of crude oil from the United States to China is as high as $80 million, exceeding the launch cost of a SpaceX Falcon 9 rocket. According to a media report on October 9, a tanker order departing from the United States this week equated to a transportation cost of $41 per barrel after conversion, while the average for the same route last year was only $4.50. This cost accounts for about 45% of the West Texas Intermediate crude oil futures price. A research report from CITIC Securities stated that oil exports through the Strait of Hormuz have recovered to pre-war levels, and the large increase in cargo volumes and the limited list of available vessels are driving VLCC freight rates continuously higher, and the effect has begun to spill over to Suezmax. Saudi Arabia's expanded discounts continue to stimulate cargo volumes, STS transfer is currently the main delivery method, and non-traditional loading and unloading operations combined with shuttle tanker capacity constraints continue to erode effective VLCC capacity, which cannot match the growing cargo volumes. As the frequency of recent ship attacks increases, repairs to damaged vessels become difficult, further damaging effective VLCC capacity, and VLCC freight rates may rise further. Cracking spreads are expected to remain high, refinery purchasing willingness is still sufficient, energy supply is gradually shifting toward stability as the priority, and seasonal rigid demand combined with longer voyage distances brought by changes in trade flows may bring a turning point for refined product transportation. In the fourth quarter of 2026, the valuation and profits of tanker leaders are expected to hit historic highs. COSCO SHIP ENGY (01138): A Morgan Stanley research report pointed out that VLCC spot equivalent time charter earnings reached $800,000 to $1 million per day, 20 times the 10-year average, mainly due to reduced effective capacity caused by geopolitical uncertainty, low global crude oil inventories before winter, which makes holders willing to pay a premium to secure oil supply, and the continued accumulation of ship damage during the conflict. The bank expects that assuming a sustainable Middle East peace agreement, if crude oil and refined product prices fall, freight rates will first go through a normalization phase. However, based on strong restocking demand, permanent damage to some conflict-related vessels, and potential "compliant" transportation demand for Iranian oil exports, the freight rate upcycle may continue after a short-term sentiment reset. The bank believes that current freight rates may be difficult to sustain, but earnings upside risks are increasing and should continue to support investor sentiment.
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