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US-listed crude tanker owners weigh risk, resilience and returns
Crude tanker leaders confront Strait of Hormuz uncertainties, geopolitical volatility, financial strength and the search for predictable long-term value
The challenges facing US-listed crude oil tanker companies transiting the now hostile waters in parts of the Middle East were explained in great detail by Frontline Management chief executive Lars H. Barstad, who described the dangers of an incident involving one of his company’s vessels. “You have a three-football-field-long tanker, fully laden with crude oil, sailing at 13 and a half knots, and then all of a sudden, you end up in a collision with a vessel that you do not know who owns it,” he said.
He added: “You do not know who manages it. You do not know who insures it. Luckily, all went well, but it just explains how crazy this market has become when this can happen.”
The incident came only days before the crude oil tanker panel at Marine Money Week. The collision was between Frontline Management’s 2020-built, 300,000-dwt VLCC Front Eagle and the 2002-built, 164,600-dwt Adalynn, which is accused by Ukrainian authorities as being part of the shadow fleet operating on behalf of Russian interests. Fortunately, the fire on Front Eagle was quickly extinguished and the two crews are safe. But incidents like this could lead to the return of tanker convoys through the region or even temporary closure.
“The world cannot live for very long … without the volumes that come through [the Strait of Hormuz]”
Teekay Tankers head of commercial Mikkel Seidelin said the closure of the Strait would trigger a rapid search for alternative supply. “First of all, you are going to see a scramble by the buyers of crude from the Middle East,” he said, adding “… most of that oil has to come from further afield.” He noted that “convoys could be an option, only daylight transits and those kind of things,” adding, “You are not going to spend more time in these hotspots than you have to”.
DHT Holdings co-chief executive Svein Moxnes Harfjeld noted that the threat of prolonged closure was low. “It has always been talked about … but for long term sort of or prolonged closure, I think is unlikely.” One indicator was that marine insurance has not gone up, he noted.
International Seaways chief executive Lois Zabrocky agreed that disruption could not be tolerated for long. “The world cannot live for very long in a normal situation without the volumes that come through. China and India need their energy to be moved.”
But the situation was extremely fluid, she said: “Anything can happen because we are in a really dangerous place in the world. However … there are a lot of complex discussions going on behind the scenes that will keep the Straits open.”
Geopolitics is embedded in the tanker trades
Mr Barstad cautioned that geopolitical risks extend far beyond Hormuz. “We have been very vocal on how dangerous this situation can become with the Dark Fleet, but here we have a very close call of having 2M barrels of crude oil in a big ship in the Middle East.” He said the inability to communicate with the counterparty vessel highlighted the risks of opaque ownership and sanctions.
Mr Harfjeld contrasted the different risk profiles in the Red Sea and Hormuz. “The activity you had in the Red Sea was very much ship related, and it was very hard to defend yourself as a ship.” He compared this to elsewhere: “For now we will go to the Middle East, but of course, things can change, and then you need to change your policy.”
Ms Zabrocky pointed to sanctions as a structural factor. “You have got 110 VLCCs on the OFAC list. That is political, but it is a fact.” The dark fleet could potentially have an impact on fleet supply. “Hopefully peace breaks out across the world. [Then] what are those vessels going to do for trade?” she said. She argued that compliant operators benefitted from this constraint, saying: “You already have a finely bounded market … you have a very positive market for all the publicly traded owners trading compliantly and investing in their vessels in the proper way”.
“Trying to take geopolitics out of oil … I think that is almost counterintuitive”
Mr Seidelin emphasised that geopolitics had become inseparable from market dynamics: “Trying to take geopolitics out of oil and the transportation of oil, I think that is almost counterintuitive. He reflected that “we have not had a sample size of any significance where you can run that scenario you are talking about. Since February 2022, we really have not had a time without a massive geopolitical impact.”
The impact on earnings
Company filings reveal the financial underpinnings behind these strategic assessments. Frontline reported Q1 2025 net income of US$146.4M, compared with US$200.7M in Q1 2024. Its 2024 annual report showed total assets of US$6.4Bn at year-end, with shareholders’ equity of US$4.0Bn.
DHT Holdings’ Q2 2025 results reported total assets of US$2.2Bn and equity of US$1.6Bn. Mr Harfjeld told the panel that the company’s approach was to maintain consistency: “We were a bit ahead of the rest of the pack in delivering [returns] with a view to structure a capital allocation policy that we focus on should be sustainable over time”. He argued that “lower leverage is here to stay.”
International Seaways’ Q2 2025 filing showed assets of US$2.5Bn, liabilities of US$623M and equity of US$1.9Bn. Ms Zabrocky highlighted this balance sheet strength: “We are in a position where we have over US$600M of liquidity, a similar level of debt, and over US$3Bn in assets. That allows us to look and be ready to take advantage of the market cycle.”
Teekay Tankers reported 2024 GAAP net income of US$403.7M and adjusted EBITDA of US$420.9M. Mr Seidelin described how the company had positioned itself: “It is important now to remind ourselves … we want to be around the next 50 years.”
Looking ahead, panellists reflected on how to navigate uncertainty. Mr Barstad said: “It is very difficult to answer, to be quite honest, because we have a role where decarbonisation is important to us too. But hopefully by that time, our clients are willing to pay something for it.”
Mr Harfjeld saw continuity rather than transformation: “With the information available today, DHT will be more of the same. Hopefully we can also grow, but that is not a must. It will be more of the same: good predictability, laser focus on earnings per share and how to distribute value to our shareholders”.
Ms Zabrocky’s outlook combined fleet renewal with environmental targets: “Bigger and younger, and on that journey to decarbonisation, absolutely.”
Mr Seidelin echoed the long-term perspective: “Of course, we have to focus on what is going on in the headlines, but you can plan on a long-term basis,” he said. “That ability to check - does this align with what we are trying to accomplish for the next decades - keeps the focus in the right place.”
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