Nordic American Tankers - Strong demand for mid-sized crude carriers offers opportunity to accumulate

The crude tanker market remained volatile in 2022 YTD. The year began on a sluggish note amid the Omicron-led demand concerns and high oil prices which limited seaborne trade. However, the market dynamics changed after the Russia-Ukraine conflict led to higher spot TCE rates of crude tankers in general and of mid-sized vessels, in particular, which took the Drewry crude tanker equity index up by a
high 25.2% between the last week of February and end May. The index started trending downwards yet again in June due to seasonal weakness and normalising spot earnings of mid-sized tankers, especially in the Black Sea and Med only to trend upwards up again from the second week of July when spot rates began improving. Cumulatively, the index registered growth of 50.5% YTD. Trending in
line with the market, the stock price of Nordic American Tankers (NAT) also remained volatile in 2022 YTD, but a rally in spot earnings of Suezmaxes on major trading routes underpinned the uptrend in recent weeks.

We believe the seasonal correction in spot rates of Suezmax tankers will squeeze NAT’s stock price in 3Q22, post which the company should benefit from low fleet growth in mid-sized crude carriers and changing trade patterns that will support the demand for these vessels.