In the midst of global energy market turmoil caused by the Iran war, South Korean shipping company Sinokor’s investment strategy in supertankers is reportedly yielding substantial profits, Bloomberg reported on the 14th (local time). According to the report, Sinokor aggressively secured Very Large Crude Carriers (VLCC) and expanded its fleet even before the outbreak of the war. As of the end of last month, Sinokor is estimated to control about 150 supertankers, which accounts for about 40% of vessels not subject to sanctions or bound by other contracts.
Notably, the strategy of moving at least six empty VLCCs to the Persian Gulf a few weeks before the war began—to await cargo loading—has garnered attention. The situation changed rapidly after Iran blocked the Strait of Hormuz following U.S. and Israeli airstrikes on the 28th. With oil exports halted, storage facilities in the Middle East quickly reached capacity, prompting global oil companies to use tankers as ‘floating storage.’
During this time, the rental fees for tankers soared. Sinokor is currently leasing some vessels for about $500,000 per day, which is roughly ten times the average rate last year. Bloomberg analyzed that if such contracts are maintained, Sinokor could recoup the investment for tankers, purchased at around $88 million each earlier this year, in less than six months.
Transport fares for oil have also significantly increased. According to ship brokers, the cost of transporting oil from the Middle East to China is about $20 per barrel, a significant rise from last year’s average of $2.5.
Halvor Ellefsen, a director at London-based ship brokerage firm Fearnleys, told Bloomberg that Sinokor has had a significant impact on the market by controlling a large fleet recently. He noted that they made competition fiercer and, in some cases, held a position to effectively set prices.
Founded in 1989, Sinokor started as a container shipping company. It is currently led by Chairman Chung Tae-soon, a former chairman of the Korea Shipowners’ Association. The strategy to secure tankers was reportedly spearheaded by his son, Chung Ka-hyun Sinokor Petrochemical Director.
Chung is relatively unknown outside the industry, but he is known to personally negotiate major contracts and make critical decisions himself. Bloomberg reported that he is famous for conducting internal instructions and external transactions through the secure messenger app WhatsApp and for enjoying arm wrestling with employees or business partners.
Experts assess the success of this investment as the result of strategy aligning with market conditions. Enverus energy data firm’s analyst Carl Larry commented, “A good investment position is the result of a combination of strategy and luck,” adding, “Sinokor’s decision to secure tankers was made at a very advantageous time.”