Okeanis Eco Tankers Q3 2026 Earnings Call Transcript

Okeanis Eco Tankers (NYSE:ECO) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Access the full call at https://events.q4inc.com/attendee/254903002

Summary

Okeanis Eco Tankers reported a record Q3 2026, achieving the strongest quarter in its history with an adjusted EPS of $7.67 and a $7 per share dividend, marking the 18th consecutive quarterly distribution.

The company has returned over $1 billion to shareholders since its inception in 2018, with more than half of that distributed in the current year.

Q3 time charter equivalent revenue was $338 million, with an adjusted EBITDA of $320 million and an adjusted net profit of $299 million.

The fleet achieved a time charter equivalent of about $209,000 per vessel per day, significantly outperforming peers by 70% for VLCCs and 60% for Suezmaxes.

Operational highlights include managing challenges in tanker operations and a successful ten-year survey of the Milos vessel.

The balance sheet shows $233 million in cash and a market-adjusted net LTV below 20% after recent fleet acquisitions.

Guidance for Q4 indicates strong forward bookings with VLCC spot days fixed at $688,000 per day and Suezmax spot days at $410,000 per day, despite some market volatility.

Management highlighted strategic fleet management, including leveraging inefficiencies and chartering opportunities for superior performance.

The company remains comfortable with its capital structure, maintaining its dividend payout priority and not planning to accelerate debt repayment.

Full Transcript

OPERATOR

Aristidis Alafouzos, CEO, and Iraklis Sparos, CFO, of Okeanis Eco Tankers will take you through the presentation. They will be pleased to address any questions raised at the end of the call. Matters that are forward looking in nature will be discussed and actual results may differ from the expectations reflected in such forward-looking statements. Please read through the relevant disclaimer on slide 2. I’d like to advise you that this session is being recorded.

Aristides will begin the presentation now.

Aristidis Alafouzos (Chief Executive Officer)

Good afternoon and thank you for taking the time to join our call for our Q3 2026 earnings. I’m going to start on slide 4 instead of Iraklis as usual because it is a slide we wanted to prepare for a long time, but I did not expect to show it this quickly. On our last call I had said that I hoped by the end of the year we would have returned over $1 billion to our shareholders since our inception. With the dividend we announced yesterday, we did it by Q3.

When we listed in 2018, the investor community was hesitant about another Greek shipping company. Together with our initial investors who showed trust in us, three of whom are still on our board today, we have established a track record to be proud of. I would like to think investors now see OET as a consistent and reliable steward of their capital and driven top performance. We listed in 2018 with a market cap of $225 million. Since then we have paid out more than 4.4 times that in dividends.

More than half of that billion has come this year alone. Q3 was the strongest quarter in our history and it’s the third record quarter in a row. Adjusted EPS was $7.67 for the quarter and $15.98 for the nine months. The board declared a dividend of $7 per share. It is our 18th consecutive distribution and 91% of our reported net income. To put that in context, that one dividend is about $273 million, which is more than the whole company was worth when we listed. 2026 has not been an easy year to operate tankers. Our crews and our technical manager, Kyklades, have kept the ships working through all of it with many challenges and I wanted to thank them before we get into the numbers. Part of OET’s ability to outperform is the quality of our technical manager. Whether in the Atlantic, the Black Sea, or in the Middle East, our crews have serviced our trades with professionalism and dedication. That is to be admired.

Iraklis will take you through the financials and then I will come back for the commercial and market update. Iraklis, over to you.

Iraklis Sparos (Chief Financial Officer)

Thank you, Stevie. I’m pleased to go through our third quarter earnings, a quarter that sets another record in our history, which is fleetwide time charter equivalent of about $209,000 per vessel per day. That’s $269,000 per day on our spot and $260,000 on operating VLCC days and $167,000 on our Suezmax operating days, all being spot. We report time charter equivalent revenue of $338 million, adjusted EBITDA of $320 million, adjusted net profit of $299 million and adjusted EPS of $7.67.

Our board declared an 18th consecutive quarterly dividend of $7 per share. This represents more than 91% of our reported and adjusted net income. Including this one, over the last four quarters we have distributed $15.80 per share. Backward looking, that’s close to 20% yield against our current share price on top of the share price appreciation over the same periods. On slide 6 we show the detail of our income statement for the quarter and nine-month period. TC revenue through September stood at almost $740 million, EBITDA was over $680 million and net income was almost $620 million, or $16 per share.

Moving on to slide seven and our balance sheet. At quarter end we had $233 million of cash. Our restricted cash figure as of September 30th includes an amount of approximately $67 million we have deposited short term under certain of our loan facilities which have the feature that reduce the interest paid, providing a better return than what we could achieve placing those funds under our time deposit rates. At that time we may roll forward such cash characterized as restricted, or a different amount, on a short-term basis depending on our cash flow needs and applicable rates.

Our balance sheet debt was $754 million reflecting the drawdown for the acquisition of the initial push in early July. Our book leverage stands at 35% while our market adjusted net LTV, basis market estimates on our assets and end-of-quarter cash balance, is now below 20%. Slide 8. Looking at our fleet, with the addition of the Nisos Vus in early July, we have a fully delivered fleet of eight VLCCs and 10 Suezmaxes with an average age of 5.8 years. From a capex perspective, the Milos successfully underwent its ten-year survey at the end of the third quarter, beginning of the fourth quarter.

Slide 9. Moving on to our capital structure, with the delivery of the Nisos Vus, our full financing and refinancing cycle has been effective since the beginning of the quarter. The benefits are clearly visible every quarter with the improvement of our interest expense figures. On the Misos Kismos, we have agreed with our financier that effective December of this year and through the maturity of the loan in 2030, the loan will bear a margin of 115 basis points, continuing the improvement in our capital structure, with our weighted average interest cost, pro forma for that adjustment, having been reduced to 146 basis points over SOFR.

On slide 10, we showed this exercise only for the Nisos Piperi and Nisos last quarter. I was expecting to run the exercise again in a few months, adding the Nisos de Gani and Nisos Vus with at least a couple of quarters under their trading belt. But the numbers are simply extraordinary, so I was tempted to update the slide this quarter. The Nisos Piperi and the Nisos Hero Pula were delivered to us in January, the Nisos Tigana in May and the Nisos Vus in July.

So, with on average, call it a little over half a year of operations between the four vessels, the value creation now exceeds half a billion dollars. The asset value increase, the third one on the graph, is very straightforward. We bought these vessels at between $97 and $99 million each. These are now valued at over $170 million, unrealized, but with a direct impact on our NAV and subsequently on our stock price. It’s an 80% uplift on an enterprise value basis and close to 150% uplift against the equity put on the vessels.

But what’s more interesting in my view is the second pillar. Within an average half a year, they have each generated between $20 and $60 million of free cash flow, or $160 million in aggregate. The nominal equity that was put in these vessels was a little over $210 million. Remember, we put $45 million of bank debt on each one. On that basis, over three quarters of the equity has already been returned back. Once you add the NAV benefit — that’s the first pillar on the graph — due to the arbitrage of raising accretive stock to fund these transactions, almost the entire equity put into these vessels, and this is realized value, has been paid down. Timing was obviously more than opportune, but we have set up a platform in a way that gives us the ability to precisely take advantage of such opportunities and generate such results. I will now turn it back to Aristides for the commercial market.

Aristidis Alafouzos (Chief Executive Officer)

Thank you, IR. And about the previous slide, by the end of the year I assume that all the equity being entirely paid back on those four ships, so we’re pretty happy with that. Now, looking at Slide 12 on the commercial performance in Q3, our fleet TCE for the quarter was $209,000 per day. Our spot VLCCs earned $270,000 per day and our Suezmaxes earned $166,000 per day. Including the time charter days, total VLCC earnings were $260,000 per day and fleet utilization was 98%. Q3 is normally the weakest quarter of the year. This one beat Q2, which was already a record. When we spoke in August we had fixed 48% of our VLCC spot days at about $207,000 and 42% of our Suezmax days at $133,000.

We finished at $269,000 and $166,000 a day. So everything we fixed after that call was done well above those levels. The market kept climbing through August and September and we had the days open to catch higher earnings. In August of Q3 we converted some spot voyages on the VLCCs into short time charters that would last until February of 2027, at a blended rate of $450,000 a day. This materially helped our Q3 numbers as the rate was far above the spot market but then slightly underperformed in Q4 as rates rocketed higher.

Today spot rates are around $350,000 for VLCCs, while a Suezmax is between $150,000 and $200,000 a day. Suezmax utilization was 97%, and as we announced, Nisos Sifnos was hit by a drone in July. On July 30, while loading at CPC terminal loading Kazakh crude. Most importantly, nobody on board was hurt. The incident damaged the cargo lines, cargo cranes and electrical cabling. The repair took over a month, but the vessel had loss of hire insurance to cover the lost time as well as the normal insurance to cover the damages.

Moving to Slide 13 and our guidance for Q4, I have looked at these numbers many times and I still find them hard to believe. On the VLCCs we have fixed 48% of our available spot days at $688,000 per day. We also have 509 time charter days at an average of $388,000 per day. That is 75% of our VLCC days for the quarter. On the Suezmaxes we have fixed 60% of our spot days at $410,000 per day across the fleet. That is 627 spot days at an average of $447,700 per day.

Seventy‑one percent of our fleet for Q4 are covered at an average of $420,000 per day. That is roughly $480 million on the days already covered, with 29% of the quarter still open. Our TC revenue for the whole quarter of Q3 was $338 million, and Q3 was a record. Suezmaxes are at 99% utilization while VLCC is guided at 93%, which is 53 days off‑hire. One line on what that is: Nisos Sifnos suffered engine damage while laden near South Africa. She limped slowly to Oman where we transshipped the cargo, and the vessel will begin repairs there and be completed by the end of December.

A word of caution on the open days: rates have come off the peak we saw earlier in October and I would not take the fixed spot numbers and multiply them across the rest of the quarter. I do expect the market to rebound as we go deeper into Q4, though. We have 458 days still to fix and we will fix them in the market we find. That can work for us or against us. As we have seen more than once this year, over the past weeks the markets have had a huge correction but we are still earning historically high earnings after such a steep sell‑off.

Last year the market also sold off late in Q4 and roared back in January. The market is volatile but the underlying inefficiencies remain. I believe the bottom has been found on crude tanker freight and with good cargo inquiry we’ll see rates push back up. Moving on to Slide 14. This is a slide that we use every quarter and I like it more every time. This was a market that was available to every owner. Based on the peers who have reported so far, our spot earnings in Q3 were about 70% above the peer average on VLCCs and 60% above on the Suezmaxes. Let that sink in again: 70% on the VLCCs and 60% on the Suezmaxes. On the Q4 days we fixed so far, we’re about 30% higher on the VLCCs and close to 50% on the Suezmaxes.

If we look at the blended earnings profile across Q3 and Q4, including both spot and time charter, the outperformance is even more pronounced. Based on peers that have reported so far, our VLCC rates were approximately 84% above the peer average in Q3 and around 61% on Q4 days fixed to date. On the Suezmaxes, we’re approximately 68% above the peer average in Q3 and around 49% above in Q4. Taken together across Q3 and Q4, our blended earnings are more than 1.5 times the peer average in both asset classes.

At these rate levels, the percentage matters less than the dollars. Since Q4 2019 we have generated about $450 million of outperformance against the average of our peers. Three months ago that number was $341 million, so we added about $117 million in one quarter alone. If our fleet had earned the peer average in Q3, our EPS would have been about $3 lower. To give that some scale, $450 million is twice the market cap we listed with and that is the only difference between us and the average.

It is split fairly evenly. About $247 million have come from the VLCCs and about $205 million from the Suezmaxes. That is close to $17,500 a day above the peer average on every VLCC and Suezmax spot day for seven years. It is the same ships and the same people every quarter: a modern eco scrubber‑fitted fleet, a chartering team that is prepared to take a view and a technical manager that keeps the ships approved and available when the cargo is there.

And on Slide 15, the order book—I’m not going to pretend it’s small. The VLCC order book is over 32% of the fleet and the Suezmax order book is around 30%, of which about 3 points are shuttle tankers that do not compete with us. Those are big numbers and they are a real issue for the back end of the decade. But look at when the ships arrive. For the rest of ’26 it is a half a percent of the VLCC and 1% of the Suezmax fleet. Next year it is around 7% for both.

The heavy years are ’28 and ’29 at 9% and 11% a year. Now look at the top half of the page. Today, 22% of the VLCC fleet is over 20 years old and 48% is over 15 years old. By 2028 those numbers are 29% and 56%, and by 2030 they are 41% and 61%. The Suezmax picture is also the same. I will be straight about one thing. In a market like this, nobody scraps a ship. The old ships are trading and earning, albeit inefficiently. But a 20‑year‑old VLCC does not get approved for almost all the cargoes we like to carry.

A lot of them are in sanctioned trades and they likely do not come back to our market. Right now, in my view, the inefficiency in the system is absorbing more capacity than the yards will deliver over the next years. So our view has not changed. The order book is a real consideration to look into for ’28 and after. For the next months the deliveries are manageable, the fleet keeps getting older and we have an average age in our fleet of under six years.

But what we need to be careful of is a rapid return to an efficient market while the heavy order book is delivering. This could change the balance abruptly. The inefficiencies caused by the war in Ukraine, Iran plus the Red Sea diversions create significant ton‑miles and ton‑days. Moving on to Slide 16 is a new slide created and it is ton‑days, not ton‑miles. Ton‑miles tell us how far the cargo travels, while ton‑days tell us how long a ship is tied up carrying. And that is what decides how many ships are free. The dark blue line is this year. You can see March when Hormuz shut and the AG cargoes disappeared overnight. You can see the recovery in the summer and you can see where we are now at the highest point of the chart, well above last year and well above the range of the six years before that.

Year‑to‑date, crude tanker days are up 6%, Suezmaxes are up 6%. VLCCs are down 2%, which does not sound like much until you remember that for most of the spring and summer the biggest VLCC loading area in the world was largely shut. Since September, the VLCC line is back where it was last year. And last year’s fourth quarter was a strong market. The reason is that every barrel now takes longer to deliver. Cargoes out of the Gulf are shuttled through the strait and transferred ship‑to‑ship.

So one cargo can tie up one, two or even three ships and cause them to wait. It is not only Hormuz. A good part of the Saudi crude loading in the Red Sea for Asia is going the long way around the Cape—or was. Earlier this year the Atlantic ran out of VLCCs early in the quarter, forcing the market to look at Suezmax and Aframaxes. This created further inefficiencies as it displaces the normal balances of the fleets. In the Black Sea, ships loading at CPC have been attacked, including one of ours like I mentioned, and fewer owners are willing to go there.

None of this shows up in an order book table. The ships exist; they are just taking longer to do the work per month than they did a year ago. The last slide puts the cargo side next to that. It shows global crude loadings week by week this year and compared with December 2025 before any of this started. The dark blue bars are loadings inside the Hormuz. From the middle of March they were down 10 to 12 million barrels a day and they stayed there into the summer. The bars above the line are the barrels that replace them—Saudi crude out of the Red Sea, Fujairah, the US Gulf, South Africa, West Africa.

The line is net; at the worst point the world was loading about 10 million barrels a day less than in December. Now look at the right‑hand side. Since August the volumes from inside the Gulf have been coming back and since the end of September the net line has been at or around December levels. So the cargoes are back but the fleet that is carrying them is far less efficient than it was in December for all the reasons on the previous slide—recovered volumes on a fleet that cannot move them the way they used to.

This is what took rates to where they were in October and is why they are still where they are today. What happens next? If the strait reopens properly, the shuttles and transfers go away. Over time the fleet becomes more efficient and rates come down from these levels. We said in May that a reopening would be supportive but with the reset and I still think that is right. Against that, inventories were run down for most of the year and have to be rebuilt. The long‑haul barrels do not disappear overnight and the fleet is a year older. If it does not open properly, though, what you see on these two slides continues.

My personal view is the status quo remains: the US continues to provide escort services to shuttle crude while blockading Iranian exports. I do not believe the US can abandon the Strait of Hormuz and allow Iran to decide who transits. This would be a catastrophic defeat and strategically weaken the US. Nor do I expect the Iranians to accept that the Strait of Hormuz passage is free for all, and we haven’t even touched on other issues like blocked funds, reparations, nuclear and regional proxies.

I will now hand it back to the moderator for the Q&A.

OPERATOR

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Eric Hevaldsen from Pareto Securities.

Your line is open. Please go ahead.

Aristidis Alafouzos (Chief Executive Officer)

Thank you for the question and for being on the call. I think it’s a really challenging area to track because it’s become a trade that everyone turns off their identification systems and it’s very difficult to understand what’s actually moving through. My personal view is that since the summer, exports have slowly gone up as the shuttling has become more effective. I think towards the end of the summer and the beginning of September, constraints on STS equipment and tugboats and fendering, you were seeing some delays in that which added one or two days to the voyage, which I think largely have stopped.

But I don’t think that the shuttling of, you know, entering, loading and exiting has become any more efficient. So I would say my view is that volumes have probably increased, that maybe the shuttling has become slightly more efficient just due to the STS delays. But overall nothing significant in increased efficiency. Yeah, we have that VLCC, we fixed the Koch at $90,000 a day, which is sad. It hurts us. And then we have the $50,000 blended average that goes until mid-February. On the other VLCCs, like I mentioned earlier, I’ll answer the FFA question first for sure. The time charter business that was available a month ago and the rates that were being discussed are no longer there and charterers would obviously be keen to fix quite a bit lower. I would say that at the peak of the strong market a Suezmax for 12 months was $200,000 a day and today we’re around $140,000 to $150,000 a day. So it’s still a fantastic rate even though it’s a lot lower than where it was.

What I find quite interesting though is that the FFA market is actually pricing lower earnings than where charterers are willing to price time charters. So that shows some confidence in the traders’ and oil companies’ views on the market that they’re willing to pay higher than where they could potentially hedge on FFAs today. And in terms of the VLCC sale that was done, you know it’s really hard to price a ship today. I mean you saw that a 16–17 year old VLCC that was worth $80 million in June is worth $150 [million] or was worth $150 [million] a couple weeks ago. So there’s been a huge appreciation in values. But the newbuilding, the resale is a hard one to price. So I can’t really give any more comment on that.

Thank you.

OPERATOR

Your next question comes from Liam Burke with B. Riley Securities. Your line is open. Please go ahead.

Aristidis Alafouzos (Chief Executive Officer)

Hi Liam, are you there?

Liam Burke (Analyst)

Liam Burke with B. Riley Securities. Aristides, there was talk that the VLCC rates were so high that shippers are starting to split cargoes on the Suezmaxes and then even down to the Aframaxes. I know the Aframaxes don’t matter to you, but do the split cargoes on Suezmaxes cannibalize your VLCC business or is it a net neutral to you?

Aristidis Alafouzos (Chief Executive Officer)

Hi Liam, thank you for your question. Oh no, I mean we have both VLCCs and Suezmaxes. So whenever we see cargoes, you know, because one asset class is too expensive, pushing up or breaking down to another, we find it as a positive because it helps increase the rates on the other one and it creates more inefficiencies. What happened specifically in October was that I think the West basically ran out of VLCCs. So they were looking at Suezmaxes and then Aframaxes.

You know, it’s extremely inefficient in dollars per barrel to move Aframax cargoes from the US Gulf to the East. But that’s something we saw when the VLs and the Suez ran out. But it’s something that’s happened in West Africa. Sorry, you know, I think you asked me a question about this in the past as well. For a couple years now, whenever the Suezmaxes have been quite strong and because of the Ukraine war, Suezmaxes, until this year, have performed better than VLCCs. We were able to compete with Suezmax cargoes on our VLCCs and find ways to triangulate by ballasting our VLCCs from Asia, loading West Africa, coming up to Europe and then fixing US Gulf for Brazil/East. So, you know, I think these types of inefficiencies give opportunities to savvy chartering teams and we hope they continue.

Liam Burke (Analyst)

Great, thank you. Iraklis, you do have a higher debt load now on the delivery of vessels. Clearly the capital allocation priority is for dividend payout. Is there any need to allocate more towards debt reduction or are you just happy to amortize it the way you have it laid out?

Iraklis Sparos (Chief Financial Officer)

Hi Liam. No, I think we continue the course. No change in our capital allocation strategy. We’re comfortable with our leverage. We continue to amortize as is. I think the four Suezmax acquisitions and the debt that we put into them was a good indication of where we feel comfortable at. No plans to accelerate debt repayment either. We’re happy with where we are.

Liam Burke (Analyst)

Great. Thank you very much.

OPERATOR

Your next question comes from Evan Colesgaard with Clarkson Securities. Your line is open, please go ahead.

Evan Colesgaard (Analyst)

Thank you. So back to today’s spot market. As I said, you think that there are no efficiency gains in the trade today, but we obviously see a quite big correction in spot rates for VLCC. But you also said that you think that rates are likely to rebound soon. So could you give us your thoughts on the recent correction and why you think rates could go up again?

Aristidis Alafouzos (Chief Executive Officer)

Sure. Well, look, I mean I think it’s normal whenever there’s a huge run-up in rates that the end user finds ways of avoiding to pay, you know, $150 plus delivered oil. And rates had gotten so expensive that it was the first time that freight was a meaningful percentage of the cargo value. So I think the highest done from US Gulf was 80, 85, 90 million and if the cargo was 200 million and oil was at 100, that’s almost 50% of the cargo value. That’s never happened before.

So I think the buyers of oil obviously had to buy whatever they needed to buy in order to keep the refineries working. And then what we’re seeing now is everyone taking a chance to find ways of either using inventory or being creative and stepping away from the market and letting it unwind a bit. And another way to keep the market quiet is that if you have ships in position, you use your own vessels as well. So the charterers have their own time charter fleets and they can use relets to keep the market quieter instead of fixing out on third-party vessels.

So I think they’ve been quite good at taking a lot of steam out of the market. But there’s volatility in this market and we haven’t seen any systemic change which shows that the inefficiencies and the tightness in the market have gone or deteriorated. So yeah, I definitely think that we’re close to the bottom. It’s getting a lot busier on Aframax in the US Gulf, the Suezmaxes seem to have stabilized out of West Africa. The VLCCs are busier these past couple of days but rates are still coming off. I mean Frontline/Chevron on a Frontline relet just fixed 310 from Fujairah East which was probably around 330 yesterday.

But I think this is the floor we’re getting to and we’ll see more cargo inquiry over the next couple weeks and rates stabilize and push up from there.

Evan Colesgaard (Analyst)

Great, thanks. And then looking a bit longer in time. So I think there’s a lot of different assumptions when it comes to 27. So you obviously have the FFA market and you said the time charter market could price it even higher and then obviously you have the equity market which seems to be pricing it even lower. So as you go into 27, obviously it’s a time before you will take the redelivery of your time charter ships but in 27 you’ll basically be fully spot exposed.

So how do you think, 27, and I have to just wait for 27 to arrive and then just bet then. How do you think about 27 and do you want to potentially take more coverage for 27 going forward?

Aristidis Alafouzos (Chief Executive Officer)

Look, overall I think long-term charters, it’s quite challenging to pinpoint the right time to outperform the spot market and the people who charter our ships for long periods are oil traders and oil companies who also have a view on the market. So I think having a pretty competitive breakeven and a very good spot operation so we can outperform the spot market in almost all cases will outperform the long-term TC market. So if we see an opportunity where there’s a big disparity in our view with the market’s view and we think we absolutely are convinced that we should put a lot of ships on long-term TC, we have zero issue doing that.

And then the chartering team can take vacation for three, four, five years. But we haven’t seen that yet. But there’s no fear for us to look at time charter if we think the opportunity is there. It’s just that, you know, we’ve learned and the market’s learned the hard way for the past few years that long-term TC has been a mistake for all companies, not just us.

Evan Colesgaard (Analyst)

Thank you.

OPERATOR

Your next question comes from Clement Mullins with Value Investors Edge. Your line is open. Please go ahead.

Clement Mullins (Analyst)

Hi, good afternoon team. Thanks for taking my questions. I wanted to start with a modeling question. You mentioned the Nisos Sifnos attack being covered by insurance. Were the proceeds booked in Q3 as other income and secondly should we expect incremental proceeds in Q4?

Iraklis Sparos (Chief Financial Officer)

Yeah, I’ll take this one. On the Sifnos we have recognized the loss of hire revenue. Well, under our TC we have recognized loss of hire income. Yes, in Q3. We did capture $0.06.

Clement Mullins (Analyst)

Thank you. And then your slide showing crude tanker ton-days being up nicely year over year was quite interesting. But I wanted to get some more insight on how Sinokor has been employing its assets recently and whether that has had an impact. They’ve played a large role in the shuttling business around the strait, we all know that. But the vessels they have outside, have they been traveling at speeds similar to the rest of the fleet or are they, let’s say, to an extent holding back a bit?

Aristidis Alafouzos (Chief Executive Officer)

Look, I think in terms of what Sinokor does inside the Hormuz, you know there are people who track their ships and they can give you a better answer than I can. So I’m not going to comment on that. But outside of the Hormuz, where people keep their AIS systems on and you can track ships, it’s evident that Sinokor plays a very effective role as a buffer and support to the market. And when the market is strong, you see that their speed and utilization increase, and when the market is weak, the speed they travel at reduces as well as their utilization.

And this is another, you know, it’s obviously positive in any downfall when the market comes off as it is now because they reduce, you know, they reduce availability of their ships and they choose not to fix. Which I think the VLCC community has now accepted that they do this to the benefit of the other owners to a greater extent than they do to themselves. But looking medium term, you know, Sinokor has taken this massive bet building up a 150-ship VLCC fleet with what seemed like extremely expensive assets and rates at the beginning of last year. I would assume now these assets have been completely paid off and the time charters are making money, and that just makes Sinokor a very strong counterparty going forward. So I think in addition, as the newbuildings deliver, we’ll continue to see Sinokor use their size to help push up the market where they can.

Clement Mullins (Analyst)

This is exactly what I was looking for. Thank you. And final question from me. We’ve seen some efforts by the Trump administration to try to get some sanctioned vessels back into the regular trading fleet. Estimates regarding the number of vessels that may ultimately, let’s say, come back have been all over the place. But what is your base case scenario on this front? I’m guessing you expect the impact to be limited.

Aristidis Alafouzos (Chief Executive Officer)

Yeah, that’s a great question, Clement. So firstly, I mean, yeah, I’ve heard rumors and I’ve read articles on, I think, Reuters that, you know, Vitol and Trafigura and Mercuria have been looking at ways of finding more ships to shuttle more cargoes in the Hormuz. I think, as if you’re an owner of a VLCC, you should tell Trafigura that that works against their interest and they shouldn’t do that. But I think it’s natural that in the pie of the VLCC fleet, or the total tanker fleet, we have normal ships and we have sanctioned ships.

And then we have this part that’s gray fleet but not sanctioned. I think this part of the fleet, it’s quite easy for these vessels to transfer back over into the normal fleet. I’m sure the U.S. and OFAC have some understanding with the traders or the buyers of these ships that once they go into normal hands, they won’t be doing sanctioned business and they potentially won’t be, you know, exposed to sanctioned trades that they had done earlier in their lives.

But these ships are, you know, 20, 22 years old; they don’t have much life left in them. Maybe they have a couple Hormuz transits, but they’re not going to come back and compete in the normal market with us. So yeah, they do. Every one of these ships does replace a normal ship that was shuttling inside the Hormuz, but, you know, there aren’t that many of them and they’re extremely old and inefficient. In terms of the sanctioned fleet coming back, you know, I think it’s hard to think of a reasonable way where they can. Like, I mean, if we assume that a large percentage of the sanctioned fleet had some relationship with Iran directly and then there were others who were just, you know, opportunistic owners, it seems very hard to believe that you would waive sanctions on an Iranian-related vessel and then that specific Iranian-related vessel will transfer crude oil through the U.S. route under U.S. protection and, you know, eating into Iran’s story that the Hormuz is closed.

So I think that unsanctioning of sanctioned tankers, I don’t see how it’s reasonable or practical in my mind, but, you know, politics are politics and sometimes they surprise you.

Clement Mullins (Analyst)

Makes sense. That was a comprehensive answer. I’ll turn it over. Thank you for taking my questions.

Aristidis Alafouzos (Chief Executive Officer)

Thank you.

OPERATOR

There are no further questions at this time. I’ll now turn the call back to Iraklis Sparos, CFO, for closing remarks.

Iraklis Sparos (Chief Financial Officer)

Yeah, thanks, everyone, for joining. We look forward to touching base again regarding Q4 sometime in February. Thank you.

OPERATOR

This concludes today’s call. Thank you for attending. You may now disconnect.

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