Scorpio Tankers Sees Sharp Upswing In Product Shipping Rates

In this episode of Capital Link's 2026 Corporate Presentation Series, we welcomed Mr. Robert Bugbee, Director & President, Mr. Lars Dencker Nielsen, CCO, and Mr. James Doyle, Head of Corporate Development & Investor Relations of Scorpio Tankers (NYSE:STNG). The senior management team presented an update on the company's operations and growth outlook, highlighting current market conditions, impact of increased oil supply, fleet strategy, and capital allocation priorities.

To watch the full discussion please visit the following link:

https://www.youtube.com/watch?v=Jcpfc1dX4d0

A Strengthening Market

President Robert Bugbee started off highlighting that spot rates have moved continuously stronger, a trend continuing even as we speak today. He pointed to strong time charter demand from a diversified group including national oil companies, traders, and other owners, and rising prices for modern tankers. He also noted that activity in the forward market points to continued strength ahead.

Mr. Dencker Nielsen provided specific data on the topic, illustrating the surge. For LR2 tankers, voyages from Korea to Australia are now fixing above WorldScale 200 (WS 200+) translating to charter equivalent rates north of $50,000 a day. Middle East routes are also exceeding WorldScale 200 (WS 200+), translating to $45,000-$50,000 daily. He noted that both product LR2 market and crude Aframax markets are strong simultaneously, limiting vessel substitution and supporting rates.

Structural Drivers

Mr. Doyle noted that over the last four years, demand has consistently outpaced supply, amplified by increased ton-miles and geopolitics. Ton-mile demand is up roughly 20% since 2019 due to structural shifts in global refining. New export refineries in the Middle East are offset by closures in the U.S., Europe, and Asia, forcing longer voyages. For example, California refinery closures could effectively double West Coast product imports, largely coming from Asia.

Geopolitical events continue to tighten the mainstream fleet. Iran continues to move crude through a sanctioned "shadow fleet," creating uncertainty for buyers and insurers. In Russia, even if a peace deal with Ukraine were reached, most sanctioned product tankers, many aging, uninsured, and operating outside mainstream markets, would likely head to the scrapyard rather than re-enter regular trade, meaning the fleet would require significant rejuvenation before impacting normal shipping flows.

Financial Fortress and Capital Allocation

On capital allocation, Mr. Bugbee was clear that the company would prioritize establishing a sustainable dividend that can increase over time and remain intact across market cycles, which he views as essential to building investor trust and supporting a more stable valuation and capital structure.  Since 2023 the company has returned approximately $1.05 billion to shareholders through $850 million in share buybacks and $200 million in dividends. He also ruled out using capital for large-scale M&A, adding that the company will opt for long-term value creation.

Fleet Strategy and Outlook

Even though they maintain a strategy centering around a young fleet, Scorpio Tankers still harvests value from older vessels.  The company has fixed some older vessels on five-year time charters at attractive rates, which Mr. Bugbee noted secures both the income and fleet value.

Mr. Nielsen added that strong short-term fixing also reflects market confidence, as modern Aframax and LR2s are able to command over $40,000 per day for one year, levels not seen since early 2022.

"The company is in a great position. We have a strong underlying market that’s not only high on historical levels but improved through solid fundamentals over the last 12 months" Mr. Doyle concluded.

Disclosure: Capital Link works with Scorpio Tankers (STNG). This content is for informational purposes only and not intended to be investing advice. We would like to highlight that this is not an article with Capital Link's editorial. It reflects only comments made by management during the company presentation

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.