Evercore Doubles VLCC Forecast to $115,000 a Day for 2027

Evercore ISI has doubled its 2027 VLCC earnings forecast to $115,000 a day, even as the bank warns that the tanker supercycle is being driven by geopolitical disruption rather than fundamentals — and may already be near its peak.

In research published yesterday, analyst Jonathan Chappell lifted his 2027 VLCC projection from $57,500 to $115,000 a day, a 100% increase, and raised his 2026 estimate by 97% to $215,000 a day. The bank's model now points to fourth-quarter VLCC spot earnings averaging an extraordinary $476,000 a day, before rates begin retreating through 2027.

Why is Wall Street divided?

The seven tanker companies under Evercore's coverage have gained between 72% and 154% this year, comfortably outperforming the broader stock market. Yet Chappell remains cautious about chasing the shares.

He argued that tanker equities have effectively become a leveraged bet on continued Middle East instability, with their direction set increasingly by geopolitical headlines rather than historical valuation metrics. Evercore lifted its Frontline price target from $41 to $53 but kept an in-line rating — well below BTIG's $70 target. The bank also raised DHT from $19 to $26 while retaining an in-line rating, and increased Nordic American Tankers to $7 while maintaining an underperform recommendation.

Evercore sees better relative value in product tanker owners — Scorpio Tankers, Torm and Ardmore Shipping — which it considers less exposed to an eventual normalisation of crude tanker earnings and asset prices.

Others are more bullish on the boom's duration. BTIG's Greg Lewis continues to favour tanker equities, arguing that depleted oil inventories and prolonged disruption could sustain exceptional earnings. B. Riley Securities recently raised its International Seaways target to $140.

Jefferies, for its part, believes tanker earnings will decline more slowly than investors anticipate. It puts average VLCC earnings at $65,000 a day in 2027, citing an ageing fleet and the potential for substantial inventory restocking. That figure sits far below Evercore's number, illustrating how differing freight assumptions do not translate neatly into the same conclusions about equity valuations.

What are the warning signs?

Shipbrokers are increasingly flagging cracks. Braemar reported that exorbitant freight costs are pushing Asian refiners toward shorter-haul Middle Eastern crude instead of Atlantic barrels, undermining tonne-mile demand. Affinity similarly reported a VLCC correction, although suezmax and aframax markets remain exceptionally strong.

Evercore identified a more fundamental concern: its average forecast for global oil demand growth this year has deteriorated to a contraction of 1.75m barrels a day. The bank notes that the only other annual oil demand contractions of the past three decades came in 2009 and 2020 — and both were followed by extremely difficult tanker markets.

The supply pipeline compounds the risk. Drawing on Clarksons data, Evercore forecasts tanker newbuilding deliveries of 50.1m dwt next year, rising to an unprecedented 62.8m dwt in 2028, with another 54.9m dwt scheduled for 2029. It calculates underlying net tanker fleet growth of 5.3% this year and 5.5% in 2027, before accounting for disruption-related inefficiencies.

Hartland Shipping Services separately forecasts more than 100 VLCC deliveries annually in both 2028 and 2029 — levels last seen during the 1970s supertanker boom. BRS counts 283 VLCC orders scheduled for delivery from 2028 onwards.

Scrapping offers no offset. Banchero Costa records just four VLCC demolitions during the first nine months of 2026, despite an ageing fleet.

What does it mean for rates ahead?

The market's distortions are also reaching the courts. Commodity trader Mercuria's challenge to the Baltic Exchange's Gulf-China VLCC benchmark is now underway in London, questioning the reliability of assessments during the Hormuz crisis. The Baltic disputes the allegations.

Evercore warned that shipping costs are now approaching 25% to 30% of the value of the oil being transported, creating the risk that high freight rates themselves destroy demand. The bank nevertheless acknowledges that predicting the timing of any reversal is extraordinarily difficult.

For charterers, that means budgeting for continued volatility around a likely peak; for owners, the question is whether record earnings get locked into balancesheets before the 2028 delivery wave arrives.