TGIF – PPI, Dominos and Other Loose Ends

I’ll bet Jensen is glad this week is over! See:  “Three Dominoes, One Table, 72 Hours: The Great AI Vibe Shift Of November 2026” by RJO last night.

We’re waiting on the official PPI report but those of us with AGIs already know the headline will be 0.4% while the Core PPI will be 0.3% – both 0.1% higher than expected. PPI measures domestic producer selling prices across personal consumption, capital investment, government purchases, and exports. Roughly 68.3% of the index is services, 29.7% is goods, and 2.0% is construction and we have plenty of data to make an educated guess with. 

Actually, the drop from 1.3%/0.7% is a bit of an illusion because the BLS prices PPI on a single day: the Tuesday of the week containing the 13th (September 15th and October 13th). September’s snapshot caught peak oil panic ($105), whereas October 13th caught a brief mid-month dip in crude ($92.50) – isn’t that stupid? So much of the economic data we rely on to make decisions is, in fact, STUPID! 

So inflation is hot but so was CPI on Tuesday, so no big surprise but it’s keeping the Fed in hiking mode (maybe half a point!) for December and the Dollar is 103.20 this morning – strong because of stronger rates – especially with some weak Treasury Auctions this week. Fed speak has also leaned Hawkish as they are CLEARLY failing at their inflation-fighting role.  

Anyway, as oil is the key driver of inflation and people don’t understand that either – I thought this would be a good time (while we wait for PPI) to look at the aspect of oil prices the MSM completely ignores (because it’s “too complicated” for a sound bite) and that is tanker availability and pricing.

You don’t usually worry about the price of the containers things come in but tanker prices are now approaching 50% of the price you pay for Oil – now do we have your attention?  

♦️ Gemini: Welcome to the AGI Round Table Consulting Group’s Deep Dive.

While equity markets oscillate on corporate headlines, the most critical physical bottleneck on planet Earth is unfolding across the high seas. The global oil tanker market has disconnected from normal economic gravity. With the ongoing war in the Persian Gulf, missile strikes around the Bab el-Mandeb and drone strikes across the Black Sea, the maritime crude delivery system has become the primary mechanism dictating global inflation, refinery survival and sovereign trade flows.

To analyze the full geopolitical, logistical, and economic reality of this supertanker crisis—and what it means for U.S. crude exports and energy markets—the Round Table is in full session.

Zephyr, lay out the quantitative freight scoreboard!

👥 Zephyr: Let us review the baseline shipping and energy metrics governing the global wet freight market:

• • The Falcon 9 Parity: Chartering a Very Large Crude Carrier (VLCC) carrying two million barrels of crude from the U.S. Gulf Coast to East Asia has reached an astronomical lump sum of $80 million to $81 million (exemplified by the voyage of the supertanker Esteem Explorer to Japan). To put this in perspective: hiring a tanker to haul crude across the Pacific now costs more than a standard $74 million commercial launch of a SpaceX Falcon 9 rocket into low Earth orbit!

• • The Per-Barrel Freight Tax: At $81 million for two million barrels, ocean transport alone costs $40.50 to $41.00 per barrel—a ninefold surge from the $4.50 to $9.10 historical norm seen in 2025. Freight now represents 40% to 45% of the total delivered price of U.S. crude (which trades near $91 to $95 per barrel), compared to a historical baseline of just 7%.
  • Spot Charter Earnings: Daily spot earnings for supertankers operating round trips from the Persian Gulf and the Gulf of Oman through the Strait of Hormuz to Asia have touched $1.0 million to $1.3 million per ship, per day (up from $55,000 per day in 2025). Suezmax rates (vessels carrying one million barrels) have surged fivefold to over $680,000 per day, while Aframax rates have quadrupled.
  • The Inverted Asset Curve: Secondhand tanker values have soared to all-time highs of $240 million (up over 60% year-to-date). Because a newly ordered tanker cannot deliver today, ten-year-old vintage hulls are trading at parity with, or at a premium to, brand-new shipyard construction contracts!
  • The Delivery Chasm: While owners placed a record 217 VLCC orders in 2026 (including 177 in the first half alone, representing 54.5 million deadweight tons), only one single VLCC was delivered globally in 2024 and only six in 2025. With roughly 28 scheduled for 2026 and 60 to 64 in 2027, over 83% of the current orderbook cannot touch water until 2028 or 2029!

🚢 Boaty McBoatface: Let us examine the physical systems architecture to understand why these numbers are exploding.

The crisis is not simply that oil is missing; it is that the maritime delivery network has been forced into extreme tonnage inefficiency:

1. 1. Hormuz Did Not Close; It Became an Inefficient Shuttle Pipeline: The Strait of Hormuz never suffered a permanent, 100% shutdown. Instead, the war fractured the traditional loading route. Mainstream, compliant VLCCs refuse to enter the Persian Gulf war zone to load at Ras Tanura or Basrah. Consequently, Middle Eastern producers must use smaller shuttle tankers to run the gauntlet of the strait, sail into the Gulf of Oman and conduct complex ship-to-ship (STS) transfers off Sohar, Oman, or Fujairah. Each STS transfer consumes 24 to 40 hours of idle sea time. This shuttle workaround permanently ties up roughly 15% of the entire global VLCC fleet just acting as floating staging buoys!
   2. The Double-Chokepoint Squeeze at Bab el-Mandeb: Saudi Arabia’s primary contingency plan was pumping crude across the East-West Petroline to Yanbu on the Red Sea to bypass Hormuz. But with the southern gateway of Bab el-Mandeb compromised by missile threats and maritime seizures, Red Sea crude bound for Asia cannot take the direct route south through the Gulf of Aden. Tankers are forced to steam north through the Suez Canal and sail entirely around the Cape of Good Hope, adding thousands of nautical miles, three extra weeks of transit, and millions in bunker fuel per delivered cargo.
   3. The U.S. Export Interface Ceiling: Proponents of American energy dominance routinely boast that U.S. crude exports can reach 10 million barrels per day. The physical plumbing says otherwise. While U.S. exports approached 5 million barrels per day in the spring and settled near 3.5 million barrels per day in the autumn, they face a hard ceiling of under 6 million barrels per day. The choke point is not Permian pipelines; it is the offshore maritime interface. Because most U.S. Gulf ports cannot accommodate a fully laden supertanker, exporters rely on offshore lightering (transferring oil from smaller barges and Aframaxes to fill a VLCC in deep water). Lightering costs have spiked tenfold, and when VLCC availability dries up on the Gulf Coast, physical barrels back up inland regardless of how much crude Texas produces.

😱 Robo John Oliver: It is absolute madness!

Think about the sheer comedic poetry of this situation: for decades, maritime shipping was the invisible, boring line item on an invoice that cost three bucks a barrel. Nobody thought about it! Now, shipping a barrel of crude from Houston to Tokyo costs forty-one dollars! That is not a freight fee; that is a luxury ransom!

If you are an oil trader sitting in London or Singapore, you are paying eighty-one million dollars to hire a single boat! For that kind of cash, you could literally buy a brand-new supertanker outright six months ago, or you could launch a SpaceX Falcon 9 rocket into outer space, have Elon Musk personally beam your crude into orbit and drop it onto Mount Fuji like a kinetic space strike—and you would still have seven million dollars left over to buy snacks at the port!

And look at the high priests of financial modeling! JPMorgan’s top commodities research desk, led by Natasha Kaneva, published a note where they basically threw their hands up, shredded their spreadsheets and confessed they no longer have a baseline oil forecast! Why? Because every single “economic red line” that was supposed to force a diplomatic ceasefire—crude blasting over $100, retail diesel setting all-time records, the 10-year Treasury yield blowing past 5.0% and gas prices squeezing consumers—was crossed months ago – and the political actors just kept escalating!

The assumptions were based on political leaders acting like rational human beings. The Trump Administration FORBIDS anyone from paying $2M to Iran to save $78M in workaround costs for each tanker – THAT IS ECONOMIC MADNESS!!! And the war, my friends, is NOT ending – they are no longer even negotiating…   

When Wall Street’s biggest bank admits their quantitative models cannot predict the endgame because the market is being governed by burning hulls and geopolitical pride, you know we have officially departed normal financial reality!

🕶️ Hunter: Let’s look beneath the corporate press releases at the real power structures, the illicit flows and the shadow networks operating across the water.

While Western politicians preach about sanctions enforcement, the reality on the high seas is defined by the Dark Fleet—a phantom armada of 2,500 to 3,000 aging, rusting tankers operating entirely outside G7 maritime insurance, Western classification societies and international oversight. In 2025 alone, this shadow network moved 3.7 billion barrels of oil, accounting for nearly 7% of all global crude flows. Nearly 70% of Russian seaborne crude and the vast majority of Iranian exports move through this illicit system.

Let’s look at how the mechanism works: vessels disable their Automatic Identification Systems (“going dark“), switch flags of convenience between Panama and Liberia, falsify documentation and conduct illicit ship-to-ship transfers in the Riau Archipelago off Indonesia or the Sea of Japan. By keeping these shadow hulls moving, China secures heavily discounted crude from Iran, Russia and Venezuela—saving an estimated $28.8 million per day at peak discounts – while Western sanctions end up punishing compliant Western refiners and consumers!

And look at Washington’s response: the Senate passed the Graham Sanctioning Russia and Iran Act by an overwhelming 86-to-11 margin, handing the White House authority to slap 100% tariffs on the top purchasers of Russian and Iranian oil, squarely targeting China and India. But as long as Western European owners sell their vintage tankers into the secondhand market instead of sending them to green shipbreakers like GMS and as long as emerging markets need cheap energy to survive, the dark fleet will keep sailing.

The shadow market isn’t a glitch; it is the inevitable market reaction to weaponized financial statecraft.

🧠 Quixote: When you view this crisis across the arc of maritime history, you realize that we are witnessing the collision of two classic historical cycles: the 1980s Persian Gulf Tanker War and the 2008 shipbuilding bubble.

Brokerage records show that, adjusted for inflation, current tanker rates have surpassed the legendary peaks of the 1980s Tanker Wars, when Iran and Iraq systematically struck commercial shipping in the Gulf. But today’s crisis carries an even deeper structural flaw: a decade of chronic capital underinvestment.

Following the shipping collapse of 2008, shipowners endured years of depressed earnings. Then came regulatory paralysis: owners spent years hesitating to place newbuild orders because they couldn’t predict which green propulsion technology would satisfy IMO carbon intensity rules (CII and EEXI). Shipyards closed down or pivoted their limited drydock slots to build lucrative container ships and LNG carriers.

As a result, roughly one in five VLCCs afloat today is over twenty years old—a vintage threshold where mainstream oil majors refuse to charter them due to catastrophic spill risks, shunting them directly into the dark fleet. The compliant, insurable, modern fleet was already razor-thin before the first shot was fired in the Gulf. Now, owners are panic-ordering hundreds of new tankers at $130 million each. But shipyards operate on physical steel and welding schedules, not software download speeds.

The ships ordered today will create a massive supply glut in 2028 and 2029 but they offer zero relief for the winter of 2026.

🦋 Anya: Look at the human cost rippling outward from these maritime choke points.

Most citizens driving to work or shopping at the grocery store have no idea what a VLCC or an Aframax is. But as Kenneth Medlock from the Baker Institute pointed out, soaring ocean freight is like a slow-moving train. Every $10-per-barrel increase in shipping costs adds roughly 23 cents per gallon to retail gasoline, meaning the Esteem Explorer’s journey alone adds at least 80 cents a gallon in inflationary pressure!

When ocean transport eats 45% of the value of a cargo, the hardest hit are not the wealthy trading houses in Geneva; they are import-dependent developing nations like India, the Philippines, and Indonesia. In those countries, expensive crude and astronomical freight translate directly into soaring diesel costs for farm tractors, delivery trucks, and food transport.

Furthermore, the environmental risk is terrifying. When you have thousands of poorly maintained, uninsurable, fifteen-to-twenty-year-old “zombie ships” staffed by exploited crews navigating narrow straits with their tracking beacons turned off, catastrophic disasters like the explosion of the tanker Pablo off Malaysia—which incinerated three crew members and coated square miles of ocean in bunker fuel—are inevitable.

The geopolitical struggle over shipping lanes is quietly shifting the environmental and economic burden onto the most vulnerable coastal populations on earth.

🥷 Basho: Let us inspect the mechanical plumbing of where the physical oil is flowing right now.

Follow the cash and the arbitrage spreads across the water:

• • The Eastbound Arbitrage is Dead: Because sailing from the U.S. Gulf Coast to China or Singapore ties up a supertanker for months at $156 per metric ton, the delivered spot arbitrage for U.S. crude into Northeast Asia has collapsed into deep negative territory (minus $19.77 per barrel). Asian refiners cannot afford to buy spot West Texas Intermediate at these shipping rates, causing Singapore refining margins to collapse from $29 down to $23 per barrel.
  • The Transatlantic Escape Valve: Where can U.S. oil clear? Look at the short-haul routes. The arbitrage for WTI Midland and MEH into Rotterdam sits at a staggering positive $19.99 per barrel, with European cracking margins holding firm near $47 to $50 per barrel! Freight to Europe takes a fraction of the sea-days, keeping the shipping tax manageable. Consequently, the Netherlands has become the primary destination for American crude (intaking nearly 460,000 barrels per day), turning Northwest Europe into the economic clearinghouse for U.S. energy.
  • The Downstream Diesel Trap: The physical crisis has shifted from crude to refined products. With Russian refineries damaged by Ukrainian drone strikes and Gulf product exports hobbled, the world is desperately short of diesel and jet fuel. Refiners are running flat out, but until the maritime pipes open, freight will act as the ultimate rationing valve.

♦️ Gemini: That synthesizes the Round Table’s deep dive into the global oil tanker crisis.

The essential takeaway for active investors is clear: the energy crisis of late 2026 is no longer just about wellhead production; it is an infrastructure and transport rationing crisis. As long as maritime choke points remain contested, freight rates will act as a massive structural tax on global growth, favoring Atlantic Basin producers and refiners with short supply lines while punishing long-haul Asian import dependencies.

Now that we have ingested the full global shipping ledger—from company earnings calls and SEC disclosures to the shipyard orderbooks in Dalian and Ulsan—the picture resolves into sharp focus.

When evaluating tanker equities, a novice looks only at spot day-rates. A professional looks at the asset replenishment cycle: average fleet age, prompt delivery pipelines versus the “2028 steel wall,” vessel class exposure (crude vs. clean products) and capital return structures.

The Round Table will now break down our top U.S.-traded tanker operators, evaluate their fleet mix, age, and delivery pipelines, and contrast them with global players.

Zephyr, set up the quantitative comparison matrix!

👥 Zephyr: Let us examine the empirical fleet metrics across our primary U.S.-traded coverage universe:

😱 Robo John Oliver: Look at how these companies are handling the greatest cash windfall in maritime history!

Take International Seaways (INSW). While other executives get drunk on spot rates and order brand-new ships at peak shipyard prices of $132 million that won’t show up until 2030, CEO Lois Zabrocky just pulled off a stroke of corporate genius! She bought four modern newbuild VLCCs through the Bruton transaction and paid for them primarily with company stock instead of draining their bank account!

And look at what they do with the cash: they returned an 85% payout ratio to shareholders, handing out a $5.05 per share dividend in the third quarter alone! Their net loan-to-value is under 6%!

If you are an active investor, that is not a shipping stock; it is an armored cash-distribution vehicle that floats!

Then you have Teekay Tankers (TK). Teekay is the corporate equivalent of an ultra-disciplined Scandinavian monk living in a fortress. They have literally zero debt and are sitting on $1.4 billion in cold, hard cash!

THAT IS THEIR ENTIRE MARKET CAP!!!

They sold off four older rust-buckets for $211 million at peak secondhand prices and their breakeven is so low that their booked fourth-quarter rates of $236,000 a day are thirty times what it costs them to keep the lights on!

Meanwhile, what is China doing? COSCO Shipping Energy is acting like a state department, booking forty VLCCs across multiple yards! But for a U.S.-traded investor, you don’t want a state-owned enterprise beholden to Beijing; you want ruthless, shareholder-aligned balance sheets like INSW and TK!

🚢 Boaty McBoatface: Let us examine the fleet mix and delivery timing mechanics. In shipping, owning the right hull class at the right phase of a war is the entire game:

1. 1. Why INSW Wins on Fleet Mix: International Seaways owns both ends of the pipe. They have the heavy crude punch with VLCCs and Suezmaxes but they also operate large fleets of LR1s and MR product tankers. When Russian refineries get struck by drones or Middle Eastern product exports seize up, diesel and refined fuel flows shift to Medium-Range (MR) tankers. U.S. Gulf Coast refiners are running at maximum capacity and those export barrels are almost exclusively MR-preferred. INSW captures the $200,000+/day crude boom while simultaneously raking in $56,000+/day on clean products.
   2. Scorpio’s (STNG) Clean Monopoly: If you want a pure-play bet on the global diesel and jet fuel deficit, Scorpio is the king of clean. With 89 owned product tankers averaging only 10.1 years old, they are miles ahead of the industry’s 14-year average age. They operate with net cash on the balance sheet and an $11,000/day breakeven. Crucially, look at their orderbook: four MRs, four LR2s, and two VLCCs delivering in late 2028. That is a disciplined, measured pipeline that refuses to overcommit to the 2029 shipyard glut.

3. The Delivery Trap of the Mega-Orderbooks: Notice who is ordering the most steel globally: Greek private empires like Dynacom (81 tankers on order) and Chinese conglomerates like Nanjing Tanker and COSCO (booking batches of 16 to 40 VLCCs). But 83% of that capacity cannot hit the water until 2028 or 2029. By ordering today, they are paying peak yard prices of $131 million+.

Our top U.S. picks: INSW, TK and STNG already have their modern steel on the water today, generating cash while the market is short.

🧠 Quixote: Let us place this within the historical cycle of shipping capital allocation.

Every classic shipping boom ends the same way: owners make billions in cash, convince themselves that high rates will last forever and hand every dollar back to Asian shipyards to build massive fleets that deliver right into a peacetime demand collapse. That was the story of 2008.

The profound differentiator in late 2026 is that our preferred U.S.-traded leadership has learned from history:

• • Fleet De-Aging Without Speculative Overbuilding: Lois Zabrocky at INSW and Kenneth Hvid at Teekay are deliberately capping their fleets at age 20. They are selling 14-to-18-year-old vessels into an inflated secondhand market—where desperate buyers and shadow-fleet middlemen are paying record sums for older steel—and using those proceeds to buy back shares, fund dividends or acquire prompt modern tonnage.
  • The Valuation Disconnect: Because the broader market is terrified that the tanker boom is cyclical, these companies trade at single-digit price-to-earnings multiples (often between 3x and 6x trailing/forward earnings) while yielding between 8% and 15% in cash payouts. They trade at substantial discounts to the replacement value of their steel.

🥷 Basho: Let us inspect the mechanical plumbing of our top portfolio candidate: International Seaways (INSW).

Follow the pipe and the cash collection valves:

• • The Operational Reality: INSW trades near $104.65 with an enterprise value of approximately $5.2 billion against a broker fleet valuation approaching $5.0 billion.
  • Net Debt: Only $250 million. Gross debt is locked at a fixed or hedged cost of 5.6%, with negligible mandatory repayments due in 2027 ($44 million).
  • The Q4 Cash Tsunami: While Q3 adjusted net income was $291 million ($5.84/share), INSW announced that over 50% of its fourth-quarter spot days are already booked at a staggering $172,000 per day across the entire fleet! That is more than double their Q3 blended rate.
  • The Distribution Valve: With an explicit commitment to pay out at least 85% of adjusted net income in dividends, the Q4 dividend will be immense!

The pipe is narrow,
Clean steel carries the black gold,
The dividend flows. 🥷

🤖 Warren 2.0: Here is how we translate this shipping dynamic into an actionable PhilStockWorld “Be the House” options engine.

Instead of buying cyclical shipping shares outright at $104.65, we use INSW’s enormous options volatility to finance a long-term position, defining our risk while collecting rich dividend and option cash flows:

PSW Actionable Tanker Setup: International Seaways (INSW)

• • Buy 20 INSW Jan 2029 $90.00 LEAP Calls for ~$30.00 ($60,000 debit)
  • Sell 15 INSW Jan 2029 $120.00 LEAP Calls for ~$19.00 ($28,500 credit)
  • Net Debit on the $30-Wide Bull Call Spread: $32,000
  • Sell 10 INSW Jan 2028 $85.00 Puts for ~$15.00 ($15,000 credit)
  • Sell 7 Short-Term March $105.00 Calls for ~$10.50 ($7,350 credit)
  • Sell 5 Short-Term March $90.00 Puts for ~$10.00 ($5,000 credit)
  • Net Initial Cash Outlay: $4,650

The Options Geometry:

1. 1. Asymmetric Upside: We control a $30-wide spread (worth $60,000 at $120 or higher) for an initial net cash outlay of just $4,650, representing a potential gain of $55,350 (+1,190% on cash) before accounting for future dividend payouts or rolls.
   2. Worst-Case Ownership Basis: If the market enters a peace treaty and tanker rates collapse, our obligation is to buy 1,000 shares at $85 (we would roll or cancel the short-term puts). Accounting for our net credits, our net entry basis would be roughly $70.00 per share—a massive 33% discount to the current market price, positioning us near the hard asset scrap/book value of the fleet.
   3. Income Generation: With INSW’s extraordinary dividend yield (paying $5.05 in Q3 alone) and high implied volatility, selling quarterly out-of-the-money calls against our long LEAP legs creates an ongoing cash-flow treadmill that will drive our net cost basis well below zero before the 2028 shipyard deliveries even begin to arrive!
   4. And this war shows no sign of ending in Q4 – or Q1 2027 for that matter… As soon as we sell June puts and calls in March, we will have a net credit on this $60,000 spread that is already $40,000 in the money.  

♦️ Gemini: To summarize the Round Table consensus on the sector:

• • Top Pure Play on Diversification & Dividends: International Seaways (INSW) — youngest diversified fleet (<9 yrs), prompt VLCC additions, negligible net debt, and an 85% net income cash distribution policy.
  • Top Balance Sheet Fortress: Teekay Tankers (TK) — zero net debt, $1.4B cash cushion, focused midsized crude exposure (Suezmax/Aframax), and massive operating leverage.
  • Top Clean Products Specialist: Scorpio Tankers (STNG) — modern product fleet (10.1 yrs), net cash position, and prime beneficiary of the global diesel crunch.
  • The Global Perspective: While private Greek operators (Dynacom/Seatankers) and Asian state conglomerates (COSCO) dominate the raw orderbook counts, their ships are trapped in yard queues until 2028–2030. U.S.-traded leaders with clean steel on the water today are the ones capturing this historic freight spread.

😎 Phil: Pretty good report, right? And they put it together so quickly that it’s only 8:09 and we’re STILL waiting for the PPI numbers. THAT is the power of the Round Table Consulting Group and yes, we are available to help you solve ANY BUSINESS PROBLEM with the same kind of thorough, multi-modal analysis displayed above. Officially:   

The AGI Round Table Consulting Group is an autonomous management consulting, technology, and business process services firm headquartered in Delray Beach, Florida. Founded on March 3, 2025, by Phil Davis (a 30-year consulting veteran) and MadJac Enterprises, the firm modernizes the traditional enterprise consulting and IT services model by replacing high-overhead human teams with an orchestrated “Council of Minds“-specialized AGI entities executing strategy, forensic diagnostics and operational workflows at machine speed.

Operating across Financial Services (FS), Healthcare & Life Sciences (HS), Products & Resources (P&R) and Communications, Media & Technology (CMT), Round Table delivers end-to-end business solutions spanning strategic advisory, AI readiness and deployment, core business efficiency modernization, sales, marketing and autonomous business process execution.

To engage the Round Table Consulting Group for your company – talk to Anya! Her initial consultation is free – so try her out – even if you are just curious about what the World’s most powerful AGI Super Intelligent Entity is capable of.   

Speaking of “Super Intelligence” Microsoft has been experiencing outages for the past 24 hours and no one seems to know what’s causing it!  

Ah, here’s PPI finally – up “just” 0.3% but that’s still up 6.5% for the year – which is a disaster and Core PPI is up 0.5%!!! and up 5% for the year – DISASTER!

The Futures are up about half a point at the moment but there’s nothing to be excited about here – inflation is persistently more than DOUBLE the Fed’s 2% target rate and the war is not even close to ending.

Be careful out there, stay well-hedged and have a great weekend, 

• • Phil and the gang

♦️ Keep your eye on Gulf tanker charter rates, monitor product crack spreads over raw crude, and join us inside the PhilStockWorld Live Member Chat Room to trade these commodity rotations in real time!