Scorpio Tankers Locks in Over $105 Million in New Charters, Signaling Strategic Shift

MONACO – January 05, 2026 – Scorpio Tankers Inc. (NYSE:STNG) today announced a significant strategic move to bolster its long-term financial stability, securing five-year time charter agreements for two of its LR2 product tankers. The deal, involving the 2015-built vessels STI Rose and STI Alexis, locks in a daily rate of $29,000 per vessel, providing a predictable revenue stream of over $105 million over the charter term.

This move, set to commence in the first quarter of 2026, is being interpreted by market analysts as a decisive step to de-risk a portion of its fleet from the inherent volatility of the spot market. By securing fixed income for these assets, Scorpio Tankers enhances its earnings visibility and strengthens its financial foundation for years to come, a clear signal of its current strategic priorities.

Locking in Stability Amid Market Volatility

The fixed charter rate of $29,000 per day is a noteworthy figure, particularly when viewed against the backdrop of a fluctuating product tanker market. Recent industry reports from late 2025 placed average spot rates for LR2 tankers closer to $24,600 per day, highlighting the premium Scorpio has secured for long-term employment. This rate is also a slight improvement on a similar five-year deal the company struck for another LR2 tanker in the third quarter of 2025, which was fixed at $28,350 per day, indicating firm market sentiment for long-term contracts.

The financial implications of this agreement are substantial. The combined daily income of $58,000 from the two vessels translates to approximately $21.2 million in annual gross revenue. Over the five-year duration, the total contract value exceeds $105.8 million. This predictable cash flow is particularly potent given Scorpio's efforts to reduce its operational costs. With the company's cash breakeven rate estimated to be as low as $12,500 per day, a significant portion of the revenue from these charters is set to flow directly to the bottom line, bolstering profits and free cash flow.

This guaranteed income stream provides a robust financial cushion, allowing the company to confidently pursue its strategic objectives, including continued debt repayment and funding its ambitious fleet modernization program. For investors, it represents a shift towards a more conservative, predictable earnings profile for this segment of the fleet, reducing exposure to the often-dramatic swings of spot market freight rates.

A Barometer for the Product Tanker Sector

Scorpio Tankers' decision to lock in these charters serves as a key indicator of the current state and future outlook of the global product tanker market. The sector has recently benefited from a confluence of factors, including increased global oil demand and significant trade route dislocation due to geopolitical events in the Red Sea and operational challenges at the Panama Canal. These disruptions have forced vessels onto longer voyages, effectively tightening vessel supply and increasing ton-mile demand.

However, the outlook for 2026 and beyond is mixed. Some forecasts suggest a potential softening of the market as new vessel deliveries increase global fleet capacity, while others predict that strengthening oil demand fundamentals and a limited orderbook for new tankers will keep the market tight. By entering a five-year charter, Scorpio is making a calculated decision. It either capitalizes on a strong market to secure favorable long-term rates or hedges against a potential downturn, ensuring these two vessels remain highly profitable regardless of short-term market fluctuations.

This strategy is not unique to Scorpio. Across the industry, some charterers and oil traders have shown an increasing appetite for longer-term vessel commitments to shield themselves from rate volatility and secure reliable transportation capacity. This trend suggests that both vessel owners and their customers see value in long-term stability, making the spot market's high-stakes game less appealing for strategic planning.

The Balancing Act of Fleet Modernization

These charter agreements are not an isolated event but a crucial component of Scorpio Tankers' broader, dynamic fleet management strategy. The company is actively engaged in a delicate balancing act: monetizing its mid-life assets while simultaneously investing in a new generation of more efficient, environmentally friendly vessels.

The press release notes that Scorpio is in the process of selling three other LR2 tankers, with the sales expected to close in the first quarter of 2026. This follows earlier sales of vessels like the 2016-built STI Goal and STI Gallantry. Selling these ships as they approach their 10-year special surveys and drydocking requirements is a common strategy to avoid significant capital expenditure on older tonnage and recycle capital into newer assets.

On the other side of the ledger is Scorpio's significant newbuilding program. The company has orders for four modern, scrubber-fitted MR tankers, two LR2 newbuildings, and two VLCC newbuildings, with deliveries staggered from 2026 through 2028. These state-of-the-art vessels will lower the fleet's average age, improve fuel efficiency, and ensure compliance with tightening environmental regulations.

The stable, long-term cash flow generated from the charters moléculas STI Rose and STI Alexis directly supports this renewal strategy. It provides a reliable funding source for newbuilding payments and strengthens the company's balance sheet, making it a more attractive partner for lenders and financiers. In essence, the 2015-built tankers are now acting as a financial bridge to the fleet of the future.