Old Tankers Fetch a Lot Thanks to Russia.

 One more reason why the sanctions on Russia that hurt Western families do not work as intended on Russia.

""Gone With the Wind" anti-hero Rhett Butler's take on conflict still resonates almost a century later: "There were two times for making big money, one in the upbuilding of a country and the other in its destruction. Slow money on the upbuilding, fast money in the crackup."

Publicly listed tanker companies are benefiting from the latter. Despite their best efforts not to have their old ships end up with Russia's so-called shadow fleet assembled for the sole purpose of transporting its oil around the world, they are reaping a bonanza anyway.

Shipping companies have been able to sell soon-to-be-scrapped vessels at high prices as demand remains high from those who are eager to participate in the Russian oil trade. The buyers are often unlisted Greek and Chinese shipping companies. Due to sanctions, trading patterns have become highly inefficient, requiring more tankers to make longer journeys to customers who will accept Russian oil. Vessels earn a certain rate per day regardless of their age, so a cheap tanker spending more time reaching its destination generates a handsome return. Often vessels transfer oil or refined products from one ship to another at sea to obscure its origin. Growing oil demand and a dearth of new vessel orders since 2015, according to analyst Benjamin Nolan at Stifel Investment Services, are helping to prop up the value of ancient ships.

But owners of new ones are doing well, too. According to Peter Michael E. Christensen, an analyst at Cleaves Securities, tanker companies' earnings rose sharply on the back of historically high tanker rates, and to a lesser extent from selling older vessels at high prices. Euronav, Frontline, International Seaways, Hafnia and Mitsui O.S.K. are among the companies that have sold vessels, according to Stifel. One of the largest private beneficiaries has been Ridgebury Tankers, which is private-equity backed. There are knock-on effects even for those whose vessels don't wind up hauling Russian crude. Cleaves believes Double Hull Tankers, Nordic American Tankers and Teekay Tankers benefited from the appreciating values of their fleets.

Most are returning money to shareholders through dividends and share buybacks or reducing debt rather than plowing the windfall into orders for new tankers. Shares of Frontline, Euronav, International Seaways and Hafnia rose by between 54% and 94% in the past year.

Data provided by ship broker Braemar showed prices of 15-year-old Aframax and Suezmax tankers, which can hold around one-quarter to half the crude of VLCC supertankers, doubled over the past year. Prices for 20-year-old ships increased substantially, too. Generally, tankers have a maximum useful life of 25 years. The proportion of tankers age 20 years or more rose from 2.2% in 2019 to nearly 8% today, and on their current trajectory would climb to 15.5% by mid-2025, according to Braemar.

Tankers operating in opaque markets reached a record in the first quarter of this year, with strong support from the Russian trade, according to Vortexa, an energy and shipping analytics firm, in a report published last month. It noted Russian crude and refined products accounted for 80% of all opaque market tanker activity in the quarter, a 50-percentage-point increase from the previous quarter as tankers previously carrying Iranian and Venezuelan crude switched.

The effect of the sanctions on Russia is lifting all ships in this industry -- even for those in the Western world that wouldn't touch Russian crude." [1]

The only way to change the situation is for Šimonytė, Grybauskaitė and Landsbergis to go out into the oceans with their leaky bathtub and picket all old tankers. You go, tiny Lithuania...

1. Old Tankers Fetch a Lot Thanks to Russia. Mandavia, Megha. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 16 May 2023: B.12.