ADNOC L&S looks for tanker upturn on OPEC+ supply, smaller 'dark fleet'

ADNOC Logistics & Services, the shipping arm of the UAE's national oil company Abu Dhabi National Oil, expects the tanker market to improve over the second half of 2025 as OPEC+ nations add supply to the market and the "dark fleet" of ships carrying sanctioned oil shrinks.

The Russia-Ukraine war holds the potential for more oil to be transported onshore into Europe from Eastern Europe while governments have taken steps to remove ships from the "dark fleet" servicing sanctioned oil cargoes, CFO Nicholas Gleeson said in a conference call after Q2 earnings on Aug. 12. At the same time, eight OPEC+ nations are adding 2.2 million b/d of crude back in the market.

A "very large number of factors" create "much more upside to the tanker rate environment than downside," Gleeson said. "I think there's a lot being driven by perception at the moment and by liquidity because of the lack of term contracting activity, which has resulted in rates being depressed compared to what you might expect if you were a macro economist."

Scrapping candidates

Also supporting the tanker market will be seasonally stronger crude demand in winter, while there are "limited" new build deliveries in the market and a growing number of scrapping candidates for ships that are more than 20 years old, the company said in a presentation.

The EU on July 18 banned imports of refined products made from Russian crude oil, lowered its oil price cap to $47.6/b from $60/b, and blacklisted more than 100 "shadow fleet" or dark fleet tankers that have transported sanctioned oil cargoes.

"The dark fleet continues to be quite large, and there's the potential for a much larger number of vessels to exit the fleet globally," Gleeson said. "We've seen more recently enforcement of sanctions resulting in a change in the location of the sourcing of cargoes going into China and then into India, which again creates a positive push on tanker rates."

In recent years, Russia, Iran, and Venezuela have acquired a larger number of aged tankers to transport sanctioned oil, which industry officials suggest are creating significant operational risks for the shipping industry because the ships often lack proper maintenance and insurance.

The company expects to receive its first Very Large Ethane Carrier and its third LNG ship in the third quarter, after revenue surged 89% in the second quarter from a year earlier, ADNOC L&S said earlier in the day.

The shipping revenue surge was primarily due to revenue folding in from the Navig8 tanker fleet, the company said. Its second LNG ship was delivered in the second quarter.

Integr8, one of the world's largest bunker traders with a volume of 5.6 million mt/year, became part of ADNOC L&S when 80% of its parent, Navig8, was acquired by ADNOC L&S in 2024. The company has no plans to disclose bunker sales, Gleeson said.

Second-quarter revenue rose 40% from a year earlier and 6% from the first quarter of 2025, when charter rates were "soft" in tankers, gas and dry-bulk subsegments, and dry-bulk activity was reduced, the company said.

For the different divisions, Q2 tanker revenue more than doubled to $415 million from $153 million a year earlier, boosted by the Navig8 addition, even as charter rates were "softer," the company said. Gas carrier revenue increased 6% to $43 million from a year earlier, while dry-bulk and container revenue dropped 27% to $55 million due to lower charter rates.

Second-quarter offshore contracting revenue climbed 20% from a year earlier to $359 million, driven by the addition of a jack-up barge, accelerated progress on the Hail & Ghasha project, and increased handling volumes, the company said.

Offshore services revenue increased 5% to $149 million over the period, while offshore projects revenue rose 23% to $157 million, as construction of the artificial G-island for ADNOC's offshore operations reached 84.4% completion.

The company's shipping fleet consists of 52 tankers, 22 LNG ships, nine bulk carriers, three container ships, seven LPG ships, four VLACs, nine VLECs, and one molten sulfur ship, according to its website. Its logistics fleet numbers 33 jack-up barges, nine jack-up barges on time charter, 39 offshore service ships, 94 offshore logistics vessels and 67 service ships such as tugboats and oil spill response ships.