The crude tanker market is having a moment, and according to industry executives, it's not just another fleeting spike. During a recent Capital Link shipping sector webinar, CEOs from DHT Holdings, Inc. (DHT), Frontline Management AS (FRO), TEN Ltd. (TEN), and Teekay Tankers Ltd. (TNK) gathered to discuss why current market conditions feel fundamentally different from past rallies. Moderated by Jorgen Lian, Head of Shipping Equity Research at DNB Carnegie, the conversation painted a picture of sustained strength built on structural shifts rather than temporary tailwinds.

Rate Strength That Actually Sticks Around

Here's a number that gets attention: the Baltic Index has printed north of $100,000 per day for 23 days. The last time that happened was in 2020, and before that you'd have to rewind all the way to 2008. Lars Barstad, CEO of Frontline Management AS (FRO), emphasized that this isn't just about headline-grabbing spikes. The performance is underpinned by sustained volumes at $110,000 to $120,000 per day, suggesting something more durable than a short-term squeeze.

What makes this rally particularly interesting is how it's spreading across vessel classes. Initially led by VLCCs (Very Large Crude Carriers), the strength is now rippling through the entire market. Mikkel Seidelin, Chief Commercial Officer at Teekay Tankers (TNK), noted that the independent strength of the VLCC segment has lifted Suezmax earnings as well. That's actually a reversal from recent years when mid-sized vessels were the primary market drivers.

Dr. Nikolas P. Tsakos, Founder and CEO of TEN Ltd. (TEN), reinforced the constructive outlook from his vantage point operating a diversified fleet across crude, product, and LNG tankers. He confirmed that improving rate dynamics are evident even in smaller vessel classes, meaning elevated VLCC earnings are genuinely lifting the entire market. While volatility remains inherent to shipping, he stressed that the current environment rests on a solid foundation rather than speculative froth.

The Shadow Fleet Question

Any discussion of tanker markets these days inevitably turns to sanctions and the so-called shadow fleet. Recent U.S. actions targeting vessels linked to Venezuelan trade represent part of a broader effort to address sanctioned oil flows, and the panel viewed this as constructive over the longer term.

Barstad explained that sanctioned crude is increasingly struggling to find viable outlets, forcing market participants toward compliant barrels. "Eventually incremental growth from sanctioned countries is going to stop, and then we're back to the compliant market supplying the marginal barrel," he said. That matters because the shadow fleet, while substantial, operates with remarkable inefficiency.

Svein Moxnes Harfjeld, President and CEO of DHT Holdings (DHT), offered some telling context: "A VLCC today carrying sanctioned oil may complete one, and at best two, cargoes per year." Think about that. These vessels aren't competing with the mainstream market in any meaningful way. They're sitting idle most of the time, structurally detached from normal commercial operations.

Dr. Tsakos backed this assessment, noting that the shadow fleet's extremely low utilization means its potential removal or reintegration poses far less of a threat than market observers commonly assume. These aren't ships that suddenly flood the market with capacity if sanctions ease. They're inefficient, often poorly maintained assets operating outside normal trade patterns.

Supply Side Discipline Creates Long Cycle Conditions

On the supply side, things look equally supportive. The order book remains constrained thanks to ongoing shipyard congestion and the lingering effects of prolonged industry uncertainty. Meanwhile, the existing global fleet continues aging rapidly.

Seidelin pointed out that the practical scrapping age has shifted from 15 years to approximately 20 years. However, extending vessel life meaningfully beyond 20 years remains difficult within mainstream commercial trading. This creates a natural release valve where older ships exit during weaker periods, capping downside risk.

Dr. Tsakos observed that the tanker sector has undergone a meaningful structural transformation. Years of uncertainty around environmental regulations and propulsion technology have restrained speculative ordering. At the same time, increasing consolidation among publicly listed companies has introduced greater discipline and internal checks on reckless expansion. This evolution supports a more industrial approach to shipping and reinforces the durability of the current cycle rather than boom-bust volatility.

How to Deploy All That Cash

With companies generating substantial cash flows, capital allocation strategies are becoming increasingly important. Harfjeld outlined DHT's approach centered on dividends, opportunistic vessel investments, share buybacks, and ongoing balance sheet strengthening. He credited this strategy for building market credibility and supporting a premium valuation.

Dr. Tsakos made a particularly interesting point about how the market should evaluate shipping companies. He emphasized that established operators with long-term business models should be assessed primarily on earnings-based metrics rather than solely on net asset value. Noting that TEN is "trading at two times EBITDA," he urged analysts to assess the sector more like an industrial business and less as floating real estate. It's a fair point. These are operating companies with cash flows and returns, not just collections of steel that happen to float.

That said, ordering new vessels today requires significant caution. Newbuilding prices remain elevated and delivery timelines stretch far into the future. Dr. Tsakos affirmed that a VLCC ordered for delivery in 2028-29 would require a long-term rate of approximately $60,000 per day just to justify the investment. That's a high bar given the cyclicality inherent to shipping.

Barstad added that while confidence in the market is clearly growing, spot rate strength has only recently begun lifting asset values. The message from the panel was clear: measured and disciplined capital allocation beats aggressive expansion when you're this deep into a positive cycle.

Why This Time Might Actually Be Different

The most compelling takeaway from the discussion wasn't any single data point. It was the convergence of multiple structural factors: constrained supply, aging fleets, ordering discipline driven by consolidation and regulatory uncertainty, and a shadow fleet that's less competitive than feared. These aren't temporary market quirks. They're fundamental shifts that could support an extended positive cycle rather than the typical boom-bust pattern that has historically plagued shipping.

None of this guarantees smooth sailing, of course. Shipping remains inherently volatile, exposed to geopolitical shocks, demand fluctuations, and the occasional burst of irrational ordering activity. But listening to these executives, you get the sense that the industry has learned some hard lessons about discipline and capital allocation. Whether that discipline holds when rates inevitably soften will determine if this cycle truly represents a structural shift or just another chapter in shipping's perpetual boom-bust story.

Disclosure: Capital Link is the investor relations advisor to TEN Ltd. This content is for informational purposes only and not intended to be investing advice. The article includes statements made by company management during the sector webinar.