Okeanis Eco Tankers - Earnings Call - Q2 2025

Transcript

Speaker 5

Welcome to OET's second quarter 2025 financial results presentation. We will begin shortly. Aristidis Alafouzos, CEO, and Iraklis Sbarounis, CFO of Okeanis Eco Tankers, will take you through the presentation. We will be pleased to address any questions raised at the end of the call. I would like to advise you that this session is being recorded. Iraklis will begin his presentation now.

Speaker 4

Thank you. Welcome everyone to the presentation of Okeanis Eco Tankers' results for the second quarter of 2025. We will discuss matters of the forward-looking nature and actual results may differ from the expectations reflected in such forward-looking statements. Please read through the relevant disclaimer on slide two. Starting on slide four and the executive summary. I'm pleased to present the highlights of the second quarter of 2025. We achieved fleet-wide time charter equivalent of about $50,500 per vessel per day. Our VLCCs were almost at $50,000 and our Suezmaxes at $51,500. We report adjusted EBITDA of $47.3 million, adjusted net profit of $26.7 million, and adjusted EPS of $0.83. Continuing to deliver on our commitment to distribute value to our shareholders, our board declared a 13th consecutive distribution in the form of a dividend of $0.70 per share.

Total distributions over the last four quarters stand at $1.83 per share, or approximately 9% of our earnings for the period. On slide five, we show the detail of our income statement for the quarter and the first half of 2025. TCE revenue for the six-month period stood at $113 million. EBITDA was almost $80 million and reported net income was over $39 million, or $1.23 per share. Moving on to slide six and our balance sheet. We ended the quarter with $65 million of cash. Balance sheet debt was $631 million. Book leverage stands at 57%, while our market-adjusted net loan-to-value, basis the most recent broker values, is around 40%. On slide seven, we go over our main driver behind our operational and commercial performance. That's our fleet. We have a total of 14 vessels, six Suezmaxes, and eight VLCCs, with an average age of only 5.9 years.

That's the youngest fleet amongst listed crude tanker peers. All vessels are built in South Korea and Japan, are scrubber-fitted and eco-designed. From a capital expenditure perspective, we're in a very good spot with only our two 2020-built Suezmaxes scheduled to undergo their five-year dry dock at the end of the third and beginning of the fourth quarter later this year. In 2026, we only have one Suezmax for the entire year. Slide eight. Moving on to our capital structure. In May, we announced that we declared the option to purchase back our three Chinese lease vessels, the Nisos Nikuria, Nisos Kea, and Nisos Anafi. The Nisos Nikuria and the Nisos Anafi have been refinanced with a Greek bank at very attractive terms, priced at 140 basis points over SOFR, seven years maturity, and competitive amortization profile.

The Nisos Kea has been refinanced with the syndicate of Taiwanese banks led by ESUN at similarly attractive terms, priced at 135 basis points over SOFR, with seven years maturity and also a competitive amortization profile. The Nisos Nikuria and the Nisos Kea transactions closed in June within the second quarter, while the Nisos Anafi closed last week at the beginning of August. With respect to the Nisos Nikuria and the Nisos Kea, we recorded in our second quarter P&L a non-cash, non-recurring write-off of the unamortized portion of the previously recorded modification gain of approximately $1.1 million. This relates to a non-cash modification gain recorded in 2024 under our IFRS accounting policies due to the amendment of the then applicable terms and reduction of margin negotiated with our financiers. No such modification gain was recorded with the Nisos Anafi.

As such, we do not expect a similar write-off in the third quarter. These recent refinancing transactions underscore the strong confidence our financiers have in Okeanis and the resilient, well-balanced capital structure we have built. They have lowered financing margins by 55 to 60 basis points, extended average maturities by roughly a year and a half per vessel, and further strengthened our cost efficiency. We expect to realize annual interest savings of around $1 million in the first year alone, while reducing our daily cash break-even by more than $1,000 per vessel per day. Our loan maturities are now staggered between 2028 and 2032, and we are set to soon turn our attention to declaring and refinancing the last of our legacy leases on the Nisos Ring and Nisos Despotico in the first half of next year.

If our last transactions are indicative of what we can achieve, buying back these two vessels will present a compelling opportunity to deliver another meaningful improvement in our capital structure and drive break-even costs even lower. Before passing it on to Aristidis, taking the opportunity, and as we have been going through the highlights of the quarter, since our last call in May, I'm pleased with the further expansion of the universe of Equity Leases coverage on our name. In the spring, the BNB merger with Carnegie closed, effectively getting us covered by the combined team. Recently, we had our second U.S. analyst, Jefferies LLC, initiating coverage.

As we continue our work to expand our investor base and sell the story of our vision of becoming the public platform of choice within the crude oil tanker space for investors and other stakeholders, these are important milestones within our still young journey in the public capital markets. Thank you to the teams of the new and older analysts and the work that they put in. I will now pass the presentation to Aristidis for the commercial and market updates.

Speaker 6

Thank you, Iraklis. Q2 was a clear improvement from Q1. We had a fleet-wide TCE climbing over $12,000 per day, quarter on quarter. We had 100% utilization in both our segments we own on the VLCCs and the Suezmaxes. I think what made the difference this quarter is how we used the fleet's flexibility to adapt to the market dynamics of that quarter. On the VLCC side, we kept our balance of east and west positions while capitalizing on long haul voyages from the west to the east to lock in strong earnings. We fixed two vessels to go east on these long haul voyages which were profitable, and then fixed them after they discharged in the east on again profitable westbound backhauls. We fixed another VLCC from Guyana to the Far East at attractive levels.

Importantly, we cleaned up another VLCC that loaded diesel in the AG for discharge in Europe at attractive levels. That gave us a dual benefit of strong earnings on the voyage itself, as well as optimizing back in the west ahead of Q4. We put a lot of focus on both fixing ships to come from the west to the east that we positioned to lock in these strong long haul earnings, but we need to keep bringing ships from the east to the west when we find attractive opportunities to keep this fleet balanced. Either we do that with backhauls from West Africa to Europe or with the cleanup voyages that we've really successfully been able to do systematically over the past year. On the Suezmaxes, once again, we outperformed our VLCCs on a dollar-per-day basis.

We focused heavily on trading them in the west, in Europe, and West Africa, and using triangulation and vessel substitution to keep the ships full and moving without idle days. These tactics allowed us to capture stronger earnings where possible and keep the fleet fully employed throughout the quarter. As Iraklis mentioned earlier, we achieved a fleet-wide TCE of $50,500 per day with $49,800 on our VLCCs and $51,400 on our Suezmaxes. Now moving into Q3, the market has eased compared to Q2, although we had brief spikes that were more, you know, on paper, like the brief war with Iran. This is a seasonal low quarter anyways, and the outlook remains very healthy and optimistic looking towards Q4.

As of today, we fixed 77% of our VLCCs in the spot market, which they all are, at $44,200 per day, and 60% of our Suezmaxes at $34,200 for a fleet-wide average of $40,800. The current Suezmax market, though, is very firm, and we are either in the process of fixing or we'll shortly fix voyages that are at far higher rates than our Q3 guidance. That's looking good, and we're excited about these one, two, three voyages that we have coming up. In Q3, our approach has been to maximize earnings given it's a summer period and also keep this geographical balance that we like. On the VLCCs, that meant staying in the east if we felt that the TD3 or local east runs outperformed what we would expect it to earn on a triangulated basis. We did fix multiple, you know, AG east voyages.

Alternatively, when we did find backhaul opportunities for vessels opening in the east that earned similar to the TD3 round voyage, we jumped on those fixtures and took them immediately. That also allowed us, by bringing one ship from the east to the west, to fix another ship that we had in the west, to come east and lock in good earnings. The benefit also of these longer voyages that we, you know, fixing east and west and west and east is that if we do them in July or August, the vessel opens up in Q4. Hopefully, this Q4 is a lot longer than last Q4, which is quite disappointing. On our Suezmaxes, Nisos Sikinos and Nisos Sipnos have been fixed to go east for their scheduled dry docks, and they've picked up long haul voyages on the way with minimal ballast.

The dry docks are expected to be just below 20 days, as Iraklis mentioned, they'll take place in September and October. For the remainder of the fleet, we capitalized on the seasonal market softness by executing, you know, short duration voyages in the west, which we liked on the Suezmaxes. We can swap them in, so if a ship is a little bit late or early, we can swap in another ship to optimize ballast and waiting in time. This really gives a big difference to earnings if the voyages are short and you're able to limit these two factors. Now going into September, with OPEC now beginning to unwind production cuts, we expect additional barrels to come into the market and this to lead into higher utilization of tankers. We'll come back to this a bit later, but we're quite constructive looking at the market for the next quarter.

Moving on to slide 12, we continue to outperform the market and our peers with our modern fleet and very strong chartering team. As we mentioned before, the gap widens when the market spurns, as we can use our nimble fleet to position quickly and take advantage of short-term opportunities. I think this is a benefit that having a smaller fleet has that a larger fleet can't do, and it allows us to deliver consistent results above our peers. Moving on to slide 13 and the following slide, we've kept it quite short since it's August. Let's talk about the market. We keep coming back to this slide because it tells one of the most important stories of our segment, that the supply side remains structurally tight, especially on the large vessels. It's not just about age or order book.

A large part of the fleet is in the shadow trade, and we believe it's almost impossible for these vessels to return to normal trading and compete with modern and compliant tonnage. Most of the sanctioned tonnage is also over age, meaning that at some point, even this subsegment will require replacement, and that replacement will have to come from the conventional fleet. This is again positive for compliant vessels like ours. By 2028, more than half of the VLCC and Suezmax fleets will be over 15 years old, many of them, all of them, belonging to the non-eco generation, fuel thirsty, less efficient, and increasingly uncompetitive to our modern eco-design fleet. Nearly 30% will have crossed the 20-year mark with only a modest number of newbuilds scheduled for delivery. This is exactly the kind of market backdrop that we position our vessels as a preferred choice for our charters.

Meanwhile, the pace of new orders remains firmly in check despite some recent orders, reinforcing a supply dynamic that we believe will be highly supportive for tanker earnings in the years ahead. Moving on to the final slide. On the overall demand and market dynamics, we continue to see a supportive setup for tankers. With September Middle East cargoes expected to release soon, momentum could quickly return. OPEC plans to fully restore the eight members' 2.2 million barrels per day voluntary cuts by September, with about 1.1 million barrels returning in August and September. Moving this extra crude would require roughly 20 VLCCs or roughly 1.5% of the global tanker fleet supporting VLCC spot rates. In Guyana, Exxon has started production at Yellow Tail.

As announced last week, its fourth offshore development in the Stabroek block, and this is 250,000 barrels per day capacity, lifting the national output capacity over 900,000 barrels. Brazil also came online and is exporting its peak numbers as well. While much of this moves on Aframax and Suezmax over shorter distances, it is also a large VLCC trade. The additional volume still contributes positively to regional flows. Looking ahead to Q4, OPEC is weighing the partial reversal of the 1.66 million barrel production cut, excluding Russia's half a million barrel, bringing back roughly two-thirds of the remaining cuts, but at about 0.7 million barrels, with Saudi potentially accounting for half a million barrels there. More supply from the region means more demand for VLCCs to move that crude.

On the geopolitical front, Trump has reportedly threatened tougher measures on Russia, including higher secondary tariffs on buyers such as India and China, and has agreed to meet with Putin. Separately, the EU will cut the Russian price cap down to $47.6 per barrel in September, which is 15% below the market, and we'll have more regular adjustments to this cap going forward. The outcome of these moves remains to be seen, but could materially shift trade flows, as we've already seen with India. We've seen a material shift of their crude oil purchases and inquiries from the U.S., Brazil, and West Africa. Just with a small example of our VLCC fleet, multiple vessels in our fleet have either been fixed to India recently or existing voyages. On existing voyages, charters have asked for India discharge options.

This shows us that India is diverting a percentage of its crude purchases away from Russia towards the U.S. compliant crude. We find that this is very supportive of the contango structure. In Iran, closer monitoring of the shadow fleet could curb unsanctioned exports and redirect volumes to the conventional fleet. We also have the Europeans threatening snapback measures, which seem to be due by the end of August. We will see if the pressure could return on Iran as well. All of these factors reinforce our constructive outlook for the remainder of the year and beyond. I'm handing back to you, operator.

Speaker 5

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. First question comes from Omar Mostafa Nokta with Jefferies LLC. Your line is open. Please go ahead.

Speaker 1

Thank you. Hey guys, good afternoon. Thanks for the detailed update. As usual, very helpful color. I did have maybe just a couple of market-related questions and perhaps on the Aristidis, you referenced the VLCC that you cleaned up to trade diesel. In general, could you give maybe an overview of what you think this vessel will do after this voyage? Will it continue in the diesel trade or the clean trade? Is it possible to maybe just give a sense of what the economics look like in terms of the cost of cleaning it and then what you captured in terms of earnings relative to what you could have gotten had it stayed dirty?

Speaker 6

First of all, Omar, again, thank you for taking up coverage. It's nice to hear your voice on our calls as well. We've heard you on so many other calls that it's quite familiar. In terms of your first question on the cleanups, we've been doing it for over a year now, and we've been fixing on a spot basis with two counterparties. We've developed a strong element of trust with the counterparties that we fix with, where we clean up the vessels ourselves and proceed to load the cargoes. The charter doesn't need to get involved or take the risk to clean up the ships. This gives us a unique ability to be one of the very, very few spot owners who is able to offer their ships for these types of voyages. We don't see it usually happen by anyone else.

Otherwise, it tends to be on a time charter basis where the charter cleans the vessels for the trade. We have tried to fix the vessels once they've opened up after discharging in Europe with clean cargo for clean business, whether it's a U.S. Gulf to Europe or some kind of voyage similar, but we've never been able to. I can say with 99% certainty that the ship will end up loading a crude cargo either from the U.S. Gulf, maybe from the North Sea, maybe from Malta, but she'll load a crude cargo and go east. Now on the second part of the question about the economics. What we look at is two things.

If the clean market is really strong and we can, and TD3, for example, makes $40,000 just to open in China, load in AG, and come back to China, makes $40,000, and we can earn $40,000 to go clean up in the AG, load the diesel, and come to the west. For us, that makes absolute sense because the next voyage will earn $60,000 or $70,000 when you load in the U.S. Gulf, and the average will be far higher than whatever you earn in the AG. If the backhaul voyage doesn't earn as much as TD3, then we start looking at what the averages of a backhaul voyage plus a front haul voyage would make versus what a TD3 run would make plus one or two more TD3 runs at what the paper curve is pricing or what our expectations for the market.

If we think that the back of a triangulated basis outperforms, we would choose that option. In general, the triangulation has worked very well for us over the past three years. We've established our relationships with the backhaul players and with the front haul players, and it's something we like, but we're not fixed on it. In Q2 and Q3, we fixed three, four, five voyages for local AG east runs when we found that it was more profitable to do that. Thank you.

Speaker 1

Thank you. Again, very detailed. I appreciate you giving that overview. Okay. Maybe just one follow-up in terms of, you know, OPEC. You mentioned Suezmaxes have obviously done better than what you are guiding, and we're seeing rates bloom decently here recently. I guess maybe just big picture as we think about these OPEC barrels. There's been a lot of talk and a lot of, you know, expectations of this production increase. It looks like what's being produced now sort of outpaces the typical, you know, summer cooling consumption in the region. It seems that we should be seeing some of these barrels actually hit the export markets fairly soon. Just from your vantage point, are you seeing any of that?

Are you seeing any incremental cargoes coming out of the Middle East as a result of these OPEC boosts, or is it still, you know, some weeks away before we start to see that?

Speaker 6

Two, two and a half weeks ago, three weeks ago, TD3 was at world scale 44, 45. We made it up a couple of days ago to 57.5. We've seen more than a 20% increase of VLCC rates. This has been, it's obviously there's a short-term cycle where it's a reason that this happens. The position lists, edges, and flows. The bigger picture is that, yes, these cargoes are coming back to the market. At the same time, you also have the Indians diverting their supply acquisitions. I think it's a multitude of factors, but this week was expected to soften a little bit on the VLCCs. That's what our team had felt. Yesterday was indeed quiet and the day before, but today was actually quite a bit busier on the VLCCs. We think that we made up to 57.5. It came off a few points.

There's a view internally that it's bottomed now. This only can be because there's more cargoes coming out and the charters aren't able to sit back like they would have in other times and hold the cargoes off the market to have the position list grow before they come back in. They clearly have more cargoes to cover, so they can't be as patient as they were. I think that this is leading into an interesting September where we could see further upside. The paper market is definitely pricing that as well. The paper market doesn't predict the future, but it is traded by the most informed parties in the shipping market, who are the oil majors and predominantly the traders.

Speaker 1

Okay. Very good. Thank you. Appreciate that. We'll see how things develop here. Thanks again, guys. I'll turn it back.

Speaker 6

Thank you.

Speaker 5

We now turn to Petter Haugen with ABG Sundal Collier Holding ASA. Your line is open. Please go ahead.

Speaker 3

Good afternoon, guys. The first question I had written was partly at least answered now after Omar's questions. In terms of cleaning up, as you said, not many companies do that. Is it possible to say something about the levels, call it the spread between either the VLCCs or the Suezmaxes versus the MR rates that will put that trade into profits? Do you sort of need MR rates in sort of high 20s, 30s, or is it an inflection point prior to that? The economics, as specific as you assume that you can be, please, in terms of switching.

Speaker 6

Hi, Peter. Thank you for your question. I think it depends a lot on each charter. If the vessel is able to load directly from the terminal and load the full cargo or load a majority of the cargo, and you limit the further FTS operation that's required, you really reduce the cost of the loading operations. This is a cost that the charter bears. If some of the charters who control the terminals have both that can load a VLCC, obviously, you're much more competitive than a trader who might have to buy five or six cargoes and load them individually by FTS because you need to pay for each ship that comes and the operation. That's a huge benefit. I think when does the deal make sense?

Usually, when the clean market is high and the VLCC market is low because you need to have that arbitrage where it makes sense to use a VLCC, but you can't have the VLCC market flying because then, you know, our alternative options will be too good. The clean market needs to be firm. The VLCC market needs to not be relatively as firm. The charter needs to be able to control the loading to limit its expenses. The best way to do that is to discharge and load into terminals and avoid multiple FTS operations, which are expensive.

Speaker 3

Okay. A follow-up on that topic. How much of your fleet is currently now doing clean products? How has that developed now over the past year, roughly, so to speak? I do remember, I think at least I remember, that was it six ships doing clean trade last summer at one time.

Speaker 6

Yeah. I mean, right now, we had one ship in Q2 and one ship in Q3. It's not a big amount of the fleet. At times this year, we've had no vessels being on clean. It really has to do, like you said, there's an inflection point between diesel pricing east to west, MR, LR2 rates, and VLCC rates.

Speaker 3

Okay. That's at least very interesting to see that Omar is capable of doing this on a spot basis. Second question, and I do know this is a very sort of difficult question, but I just wanted to hear your thinking around what could potentially happen now in the case of any deal between the U.S. and/or Europe and Russia. I guess the big question is to what extent Russian barrels, both on crude and product, will return to Europe. Just wanted to hear your thinking around that, the coming meeting and what could happen.

Speaker 6

Of course. I mean, the only thing that we know how to do well is fix ships or hopefully buy ships cheap. From what our view is, I think that the bid ask between Ukraine and Russia is still very wide. There's clearly a very big interest from Trump to come to a deal, but I don't know if what Russia would currently offer would satisfy Ukraine and the Europeans. I think that if there's a ceasefire, perhaps we could see something from the U.S., you know, softening a bit on its sanctions. I think that I don't see Europe changing its policy anytime soon on importing Russian crude into the European markets or any removal of sanctions on the shadow fleet. I also don't think that there's any material risk of U.S. removal of independently owned tankers in the shadow fleet.

Maybe there will be pressure for the, you know, Sovcomflot, which is the Russian state-owned company. That's a relatively small percentage of the shadow fleet, but I do not see the U.S. rewarding independent owners who trade in the shadow fleet with sanctions removals. I think that the ton-mile effect of Europe not importing will remain. Perhaps we see some fuel or VGO going to the U.S. I think my base case is that Trump and the U.S. remain frustrated in the medium term, and we don't see very much progress and potentially more strict sanctions coming.

Speaker 3

Yeah. Okay. No, thank you. Thank you for your color on that. Just a final, very sort of other type of question in the end here. Looking into the second half and also 2026, G&A is now running at approximately $4 million. It's been up and down a few times over the past quarters. Is this now the level that we should pencil in for the second half and onwards?

Speaker 6

Let me jump in here. No, a rate of $4 million a quarter should not be the base case assumption. Let me just say that over the last couple of quarters, especially in Q2, because a lot of our G&A and OPEX, for that matter, is expensed in euros, there's been an increase due to the exchange rate spike between the euro and USD. Of course, this is countered by an exchange rate swap that we have put in place, although this is below the EBITDA line. There is a gain that you will notice through our interest rate hedge. Now, setting aside the exchange rate factor, there is some seasonality on our G&A. I expect that half two will have a lower rate than what we had in half one. Of course, a lot of this is determined by the listing expenses that continue to creep up.

Speaker 3

Is that on for 2026?

Speaker 6

I think it's a little too early to have visibility. My base case assumption would be, you know, consistent with both in terms of seasonality and overall level as we have this year, assuming that nothing crazy happens with the exchange rates that would skew the figures. We are significantly hedged, but you just don't see those numbers above the EBITDA line. You see them below.

Speaker 3

Okay. Thank you, Iraklis.

Speaker 6

Sure.

Speaker 3

Yep, sold for me.

Speaker 6

Thank you. Thank you, Petter.

Speaker 5

We now turn to Liam Dalton Burke with B. Riley Securities. Your line is open. Please go ahead.

Speaker 0

Yes, thank you. We discussed the unlikely event of sanctions being lifted, but the lifting of sanctions is always highlighted as a risk to the crude tanker sector. Even if sanctions were lifted, wouldn't that shift traffic away from the shadow fleet to the more conventional vessels and still put you in a win-win situation?

Speaker 6

Hi. Thank you for your question. I mean, there are so many different parameters that it's so complicated. One of the likely bullish scenarios that I see is that the United States allows and the price cap is removed, and it allows the trade to go on normal vessels again. The shadow fleet remains sanctioned. In terms of, let's say, the Chinese and the Indian buyers and the utilization of ships, we've seen that OFAC sanctions are by far the most effective at limiting utilization. This is for the shadow trade. If we're talking about the compliance trade, whether you're sanctioned by the U.S., the U.K., or Europe, it doesn't make a difference. I think just an example is that the entire insurance market is controlled by U.S. and European insurance companies.

No owner of a sanctioned vessel in the U.S., U.K., or Australia will be able to insure their vessels or have classification or have a first-class flag while having sanctions on them. There is a very small overlap between sanctions of the EU, the U.S., and the U.K. It has not been coordinated at all. The fact that they're not overlapping means it's very complicated for these vessels to have, you know, if the U.S. removes sanctions, it doesn't mean that they still won't be sanctioned by the other two authorities. I think, yes, there are many cases in the different scenarios of how sanctions, you know, a sanctions reduction scenario plays out that could remain very bullish for tankers.

Speaker 0

Thank you. Your operating cost per vessel ticked up again this quarter. Is there anything unusual, or is it just your normal quarter-to-quarter variability?

Speaker 6

I'll let Iraklis Sbarounis answer because I focus on bringing in the money.

Speaker 3

I'd say this is focusing on running the vessels as best as possible and bringing in the revenue. That obviously has a bit of an impact on OPEX, but I think the larger impact has to do with what I explained to Petter earlier. You know, a significant part of our OPEX, more so than other peers, I expect, due to our crude composition, is based on euros. The exchange rate does play a bit of an impact. I think partially it's explained by that, but this is just against seasonality. Overall, I think, compared to last year, setting aside the exchange rate difference, we expect that the cost should be relatively flat, maybe slightly above, but nothing significant.

Speaker 0

Great. Thank you, Iraklis.

Speaker 6

Sure.

Speaker 5

As another reminder, if you'd like to ask a question, please press star one on your telephone keypad now. We now turn to Climent Molins with Value Investors Edge. Your line is open. Please go ahead.

Speaker 2

Hi. Good afternoon. Thank you for taking my questions. My first question is also on the geopolitical side. You mentioned you're seeing a large shift in India's import preferences. Should this continue or even accelerate? Where do you think the Russian volumes will end up? Do you think China would be willing to further increase its imports of Russian crude?

Speaker 6

Hey, Climent. Thanks for your question. I mean, you know, I think Trump is able to use his power against certain countries to force them to divert their crude at the expense of tariffs or sanctions. These are countries that are more your allies or your friends. I think that, you know, Turkey and India are more susceptible to Trump's pressure. The Russian crude that is no longer being bought by the Turks and the Indians will have to be sold into China. They're the only other buyer of this crude. I expect that the Indians are price-sensitive. If we see a big decrease in the Russian pricing of their crude and, you know, the discount to others grows a lot, perhaps they buy a bit more again. The only other outlet of Russian crude is China.

Turkey, India reduce, China increases, and it's a dramatic effect to ton miles for that trade, which will, we already see that it stretches the shadow fleet. The shadow fleet, the positions being up in the north are diminished. The rates in that market are rumored to have increased substantially. As we go into the winter, I do expect that there will be more purchase inquiries for older tonnage to slot into that fleet and service that trade.

Speaker 2

Thanks, Oskar. This one is more on the product side, but Europe is set to crack down on its imports of refined Russian crude, which was previously allowed. To what extent do you believe that's enforceable? Do you envision any impact on the overall market?

Speaker 6

The imports of Indian and Turkish products, it's a sizable % of the European clean product consumption, but it's nowhere near the majority. It's a relatively small %. I do think that trade flows will adjust, but it is complicated. I don't understand the workings of a refinery very well, but I assume that they have multiple storage tanks. I assume that they blend different types of crudes to produce the optimum output of different clean products. Part of that could be Russian crudes. Issuing certificates for some crudes, that some products that do or don't have Russian crude inside, is messy, and it's definitely nothing that's occurred in the industry so far. We'll have to see how that's dealt with in the future. It'll definitely be interesting to see it.

Speaker 2

Definitely. Only time will tell. That's all for me. Thank you for taking my questions, and congratulations for the quarter.

Speaker 6

Thank you. Hopefully, next quarter we're able to do the same.

Speaker 5

This concludes our Q&A. I'll now hand back to Iraklis Sbarounis for any final remarks.

Speaker 3

Yes. Thanks to everyone for dialing in and participating. It's been a long call for the middle of the summer. We look forward to touching base again in November. Thank you very much. Bye-bye.

Speaker 5

Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your line.