MB Capital Strategies Glossary — Updated June 2026
A tanker is a vessel designed to transport liquids in bulk. The type of liquid determines the vessel category: crude oil, refined products, liquefied natural gas (LNG), or liquefied petroleum gas (LPG). Tankers are among the most important infrastructure in global commodity supply chains — roughly 60% of global oil production moves by sea.
| Type | Size (DWT) | Cargo | Typical TCE Range |
|---|---|---|---|
| VLCC | 200,000-320,000 | Crude oil (long-haul) | $20,000-80,000/day |
| Suezmax | 120,000-200,000 | Crude oil (med-haul) | $15,000-60,000/day |
| Aframax | 80,000-120,000 | Crude oil (short-haul) | $12,000-50,000/day |
| LR2 | 80,000-120,000 | Clean products | $10,000-45,000/day |
| MR (Medium Range) | 25,000-55,000 | Refined products | $8,000-35,000/day |
| LNG Carrier | n/a (cbm) | Liquefied natural gas | $50,000-150,000+/day |
| VLGC | n/a (cbm) | Liquefied petroleum gas | $25,000-80,000/day |
Crude Tankers (VLCC, Suezmax, Aframax) carry unrefined oil from production sites to refineries. Rates are highly correlated with global crude trade flows, geopolitics, and OPEC+ production decisions.
Product Tankers (LR2, MR) carry refined fuels — diesel, gasoline, jet fuel — from refineries to end markets. Product tanker rates follow refinery utilization and regional product trade imbalances (e.g., Europe importing US diesel).
Tanker stocks are among the highest-dividend yielding assets during freight super-cycles. The investment thesis rests on three pillars:
1. Low Orderbook: Tanker newbuilding at multi-decade lows relative to fleet size (6-8% for crude tankers in 2026). No meaningful supply increase for 2-3 years. Source: Clarkson Research, February 2026.
2. Structural Ton-Mile Growth: Trade route realignment (Russia-Asia, US LNG exports, Middle East product exports) permanently increases the vessel distance traveled per cargo unit — demand without new volumes.
3. Variable Dividends: Leading tanker companies distribute 80-100% of FCF quarterly, giving investors direct participation in freight market upside.
Freight cycle risk is the primary risk. Rates can fall 50-70% quickly if supply increases (new vessel deliveries) or demand weakens (economic slowdown, OPEC+ cuts). Variable dividend payers will reduce distributions proportionally. For long-term investors, the key is buying at low P/NAV multiples (below 1.0x) and holding through the cycle rather than chasing high dividend moments.
TCE Rate · VLCC · VLGC · Charter Rates · Freight Rates · Spot Market · Time-Charter
About Marco Bozem · Full Glossary · Best Tanker Stocks 2026
Marco Bozem
Investor & Analyst | Hard Assets, Dividends, Shipping | MB Capital Strategies
Marco analyzes commodity and dividend stocks with focus on Shipping, Mining, and Energy. All analysis is based on publicly available reports and personal judgment. Not investment advice.