International Seaways, Inc. (INSW): PESTLE Analysis [Nov-2025 Updated]

You're looking at International Seaways, Inc. (INSW) and seeing a tanker market that's printing cash, but honestly, the real story is the tightrope walk between geopolitical tailwinds and massive regulatory costs. INSW's financial position is defintely strong, with total liquidity hitting $985 million as of October 1, 2025, plus their Q3 2025 Adjusted EBITDA was a robust $108 million. Still, you need to understand that the IMO's net-zero 2050 goal and the critical global shortage of 90,000 seafarers by 2026 are not just future problems; they are driving capital allocation and operational risk right now. Let's break down the Political, Economic, Sociological, Technological, Legal, and Environmental forces shaping INSW's strategy into late 2025.

International Seaways, Inc. (INSW) - PESTLE Analysis: Political factors

Geopolitical Conflicts and Trade Route Inefficiencies

You need to understand that geopolitical conflicts are a massive, non-cyclical driver of tanker profitability. The ongoing instability in the Middle East, particularly the Red Sea security crisis, is forcing a strategic pivot in global shipping. This isn't just a minor headache; it's a fundamental change that absorbs vessel capacity and tightens the market for compliant operators like International Seaways.

The forced rerouting of vessels around Africa's Cape of Good Hope, bypassing the Suez Canal, adds an estimated 10 to 14 days to a typical Asia-Europe voyage. Here's the quick math: this detour effectively reduces the global tanker fleet's operational capacity by 5% to 8%, creating an artificial supply squeeze that pushes up freight rates. Compliant vessels also face drastically higher operating costs, with war risk insurance premiums for Red Sea transits spiking from a nominal 0.05% of a vessel's value to as high as 0.7% during peak tension periods.

This is a clear opportunity for International Seaways, whose fleet is not tied up in the shadow trade, allowing it to capture higher spot rates driven by this inefficiency.

US-Led Sanctions and the Two-Tiered Tanker Market

US-led sanctions, especially those targeting Russian oil transport in late 2025, are defintely creating a highly lucrative, two-tiered market. The compliant fleet, which International Seaways is a part of, is now the only viable option for major refiners in India and China who are pivoting away from sanctioned Russian entities.

The impact on rates is dramatic. Following new US sanctions on Russian exporters like Rosneft PJSC and Lukoil PJSC in November 2025, benchmark Very Large Crude Carrier (VLCC) rates soared to nearly $137,000 a day, a staggering 576% spike since the start of the year. This rate surge quickly spread to smaller vessel classes like Suezmax and Aframax. What this estimate hides is the sheer number of vessels now out of the compliant market: approximately 10% of the global VLCC and Suezmax fleet and 18% of Aframaxes are now associated with sanctioned trades, leaving a smaller, compliant pool to service the majority of global oil demand.

International Seaways is capitalizing on this market dislocation, as evidenced by its strong financial position, reporting a total liquidity of approximately $985 million as of the third quarter of 2025.

US Energy Policy and Export Dynamics

The US role as a major oil producer and exporter directly influences demand for International Seaways' diversified fleet. US crude oil production remains at record levels, with the EIA reporting a weekly output of 13.63 million barrels per day (Mbd) in early October 2025. This high production volume fuels export demand, particularly for the mid-sized tankers that load at US Gulf Coast ports.

The infrastructure limitations at most US ports mean that only about 51% of US crude oil volumes loaded in the first nine months of 2025 were carried by VLCCs, making the Suezmax and Aframax/LR2 classes essential for the remaining volume. This dynamic supports International Seaways' fleet composition, which includes 13 Suezmaxes and 5 Aframaxes/LR2s.

The trade flow shift is clear:

• US crude exports to Mainland China declined sharply by -64.9% in Jan-Sep 2025.
• Conversely, US crude exports to India surged by +31.8% year-over-year in the same period, necessitating longer-haul voyages.

Trade Policy Shifts and Global Flow Patterns

Trade policy shifts, particularly between the US and China, are a political factor that can instantly re-route global commodity flows. The announcement of reciprocal tariffs in April 2025, for example, immediately triggered a market reaction, with the S&P 500 index declining by 4.8% the following day.

For the tanker market, this volatility translates into rapid changes in shipping demand. The decline in US crude exports to China, down to only 3.7 million tonnes in the first nine months of 2025, forces the US to find alternative buyers, often in Europe or India, which increases the average voyage distance and, therefore, tanker demand. This is why trade policy is a critical, high-impact risk factor for the entire sector.

Political Factor (2025)	Quantitative Impact on Tanker Market	INSW Fleet Relevance
Red Sea Geopolitical Conflict	Adds 10-14 days to voyage time (Cape route); Reduces global operational capacity by 5-8%.	Increases demand/rates for all vessel classes, boosting Q3 2025 Adjusted EBITDA of $108 million.
US Sanctions on Russian Oil	VLCC spot rates surged to nearly $137,000/day (Nov 2025); 10-18% of global fleet is now non-compliant.	Favors compliant fleet, enabling International Seaways to capture premium spot earnings.
US Crude Export Dynamics	US crude production at 13.63 Mbd (Oct 2025); Only 51% of exports loaded on VLCCs.	Directly supports demand for International Seaways' 13 Suezmaxes and 5 Aframaxes/LR2s.
US-China Trade Policy	US crude exports to China down -64.9% (Jan-Sep 2025); Exports to India up +31.8%.	Creates longer-haul routes (ton-mile demand) to non-China destinations, benefiting the entire fleet.

International Seaways, Inc. (INSW) - PESTLE Analysis: Economic factors

Tanker Market Fundamentals and Rate Strength

The economic outlook for the tanker sector remains strong, which is the primary driver of International Seaways' (INSW) profitability. You need to look beyond quarter-to-quarter rate volatility and focus on the supply-demand imbalance, which is the long-term tailwind. Specifically, the tanker market fundamentals remain strong, with an aging global fleet and a small order book supporting high charter rates into 2026.

Demand is supported by global oil consumption growth, estimated at about 1 million barrels per day for 2025 and 2026, plus oil supply growth from the Americas and OPEC+ (Organization of the Petroleum Exporting Countries Plus). Supply, however, is severely constrained. The gap between the existing older fleet and the new vessel orderbook is significant, exceeding a three-to-one ratio, which means there are far more old ships nearing retirement than new ships on order. Fleet growth is modest, projected at around 2%. This supply-side discipline is the key factor keeping Time Charter Equivalent (TCE) rates elevated.

Here is a snapshot of the average spot earnings for key vessel classes in Q3 2025, showing the actual rates earned:

• Suezmax: Approximately $33,300 per day
• LR1 Product Carrier: Approximately $34,600 per day
• MR Product Carrier: Approximately $25,600 per day

Robust Profitability and Cash Generation

International Seaways continues to showcase robust profitability, even as the market experienced some moderation compared to the record highs of the previous year. The company reported Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $108 million for the third quarter of 2025. This figure demonstrates strong operational cash flow generation, a critical metric for a capital-intensive shipping business. The company's ability to generate significant free cash flow is directly linked to its low operating costs and high market rates.

Your forward estimated spot breakeven rate for the next 12 months is approximately $13,000 per day. This means that at current market rates, which are substantially higher, the company generates significant free cash flow. For instance, with Suezmax vessels earning around $33,300 per day in Q3 2025, the margin over the breakeven cost is substantial, allowing for aggressive debt repayment and shareholder returns.

Financial Flexibility and Balance Sheet Strength

The company maintains significant financial flexibility, a key defense against any future economic downturns or rate corrections. As of September 30, 2025, International Seaways reported total liquidity of $985 million. This substantial liquidity position includes both cash and undrawn revolving credit capacity. The balance sheet is healthy, with a low net loan-to-value ratio of approximately 13%, calculated on the market value of its fleet, which provides a strong buffer and capacity for future fleet investments or opportunistic acquisitions.

The company's strong financial position is summarized below:

Metric	Value (Q3 2025)	Note
Adjusted EBITDA	$108 million	Operational cash flow
Total Liquidity (as of Sep 30, 2025)	$985 million	Includes cash and undrawn credit
Net Loan-to-Value Ratio	13%	Low leverage on fleet market value
Forward Spot Breakeven Rate	Approximately $13,000 per day	Basis for strong free cash flow

This financial strength allows International Seaways to continue its disciplined capital allocation strategy, which includes a commitment to return at least 75% of adjusted net income to shareholders via dividends.

International Seaways, Inc. (INSW) - PESTLE Analysis: Social factors

The Global Seafarer Labor Shortage is Critical

You're operating in a talent market that's tightening fast. The global seafarer labor shortage is a primary operational risk for International Seaways, Inc. (INSW) in 2025, directly impacting crewing costs and vessel uptime.

The International Chamber of Shipping (ICS) forecasts a critical shortfall of nearly 90,000 trained officers by 2026. This deficit is particularly acute in senior ranks, like Chief Engineers and Captains, which are essential for managing modern, complex tanker fleets. This scarcity forces companies to increase wages and bonuses, which drives up vessel operating expenses (OpEx). Simply put, finding a qualified Second Engineer is one of the most expensive headaches you have right now.

Here's the quick math on the pressure points:

• Shortfall of 90,000 officers projected by 2026.
• Geopolitical tensions (e.g., Red Sea, Russia-Ukraine) have reduced the availability of nearly 15% of the global maritime workforce.
• Higher OpEx from competitive wage increases is a certainty for 2025 and beyond.

Crew Welfare Directly Impacts Retention and Safety

Crew welfare is no longer a soft issue; it's a hard financial metric tied to safety and retention. The long-term nature of seafaring-extended contracts and limited shore leave-is driving high stress and early retirement, especially among experienced officers.

Recent 2025 survey data highlights the severity of the mental health crisis at sea. A significant 44% of seafarers reported stress during their last contract, a sharp increase from 35% in 2024, and 16% reported feeling mentally depressed. Furthermore, a 2025 study showed over 33% of seafarers on cargo ships reported not getting enough sleep, a clear indicator of fatigue. This fatigue is the single biggest threat to operational safety, contributing to an estimated 15% to 20% of all maritime fatalities. You need to invest in better connectivity and mental health resources, or your Total Recordable Case Frequency (TRCF) will suffer.

Crew Welfare Metric (2025)	Data Point	Operational Impact
Seafarers Reporting Stress	44% (Up from 35% in 2024)	Increased human error, lower performance.
Seafarers Reporting Mental Depression	16%	Higher attrition, long-term health claims.
Seafarers Reporting Insufficient Sleep	Over 33%	Fatigue is the top safety threat; TRCF risk rises.
Weekly Day Off Compliance	90% report having no weekly day off	Violation of rest hour rules, potential port state control detentions.

International Seaways is Addressing Diversity with a Female Cadet Program

To combat the talent shortage, International Seaways is proactively tapping into underutilized talent pools. In May 2025, the company announced a partnership with V. to launch a newly designed Female Cadet Program, with the first intake scheduled to join two dedicated training ships in September 2025.

This is a smart, concrete move to address a huge gender imbalance. Women currently make up less than 2% of the global seafaring workforce. By providing gender-specific facilities, workwear, and support from female senior officers, International Seaways is working to establish best practices for a safer, more inclusive environment. This initiative is a necessary step to secure future talent and improve the diversity score, which investors are defintely watching.

Rising Public and Investor Pressure for Strong ESG Performance

The market is now tying your Environmental, Social, and Governance (ESG) performance directly to your cost of capital and your commercial viability. This pressure is rising on all fronts in 2025.

Charterers-your customers-are increasingly using ESG metrics, often formalized through frameworks like the Sea Cargo Charter, to select vessels. They favor fleets with better safety records and lower emissions, meaning a poor Social score can cost you a high-margin contract. On the financing side, banks adhering to the Poseidon Principles are integrating climate alignment into their lending decisions. International Seaways has been a leader here, becoming the first NYSE-listed shipowner to include a sustainability-linked pricing mechanism in a credit facility. For 2025, the company has explicitly included social objectives, specifically the safety metric of Total Recordable Case Frequency (TRCF), in its executive compensation plan. This clearly signals that safety and social performance are now seen as a direct driver of shareholder value.

What this estimate hides is the long-term cost of not meeting these social expectations; it's not just a higher interest rate, it's a loss of access to the most competitive capital and the best charterers.

International Seaways, Inc. (INSW) - PESTLE Analysis: Technological factors

You're watching the tanker market pivot fast, and technology is the engine of that change. International Seaways is navigating this by mixing new, dual-fuel vessels with smart retrofits on their existing fleet. This isn't just about being green; it's a hard-nosed commercial strategy to ensure their ships meet tightening regulations, like the Carbon Intensity Indicator (CII), and stay competitive for high-paying charters.

The company is making substantial capital commitments now, which is the right move to lock in long-term operational efficiency and revenue. Here's the quick math: a more efficient, compliant ship commands a premium and avoids costly penalties or charter rejections. It's a classic case of spending money to save and earn more.

Fleet modernization is key: International Seaways operates dual-fuel liquefied natural gas (LNG) VLCCs and is taking delivery of six dual-fuel ready LR1 newbuildings

The core of International Seaways' technological strategy is fleet renewal, focusing on vessels that can handle Liquefied Natural Gas (LNG), a cleaner-burning transition fuel that reduces CO2 emissions by 20-25% compared to conventional fuel oil. The company already operates three dual-fuel Very Large Crude Carriers (VLCCs), which were delivered in 2023 and are employed on long-term time charters with Shell, providing stable, premium revenue.

The near-term focus is on their product tanker segment. International Seaways is taking delivery of six dual-fuel ready Long Range 1 (LR1) newbuildings from K Shipbuilding Co., Ltd. The aggregate contract price for these vessels is approximately $359 million. The first two, Seaways Alacran and Seaways Balboa, were delivered in the third and fourth quarters of 2025, respectively. The remaining four are scheduled for delivery throughout 2026. Securing this new tonnage is defintely a strong competitive advantage.

Newbuilding Program (as of Q3 2025)	Vessel Type	Total Units	Total Contract Price (Approx.)	Delivery Status (2025)
LR1 Newbuildings	Dual-Fuel (LNG) Ready Product Tankers	6	$359 million	2 delivered (Q3/Q4 2025)

Investment in energy-saving devices, like wake improvement ducts and advanced hull coatings, improves fuel efficiency and Carbon Intensity Indicator (CII) ratings

For the existing fleet, the company is prioritizing retrofits to improve operational efficiency and ensure compliance with the IMO's Carbon Intensity Indicator (CII) regulations. This means getting a rating of 'C' or better to avoid having to submit a corrective action plan. International Seaways has allocated a substantial $61 million for what they term 'green spend' to enhance their current ships. This investment targets technical upgrades that yield immediate, measurable fuel savings.

Key energy-saving devices (ESDs) and systems being implemented include:

• Advanced Hull Coatings: Using low-friction paints to reduce drag and improve speed-power performance.
• Propeller/Wake Improvement Ducts: Devices that optimize water flow to the propeller, increasing thrust efficiency.
• Engine Power Limitation (EPL): Installing systems to limit maximum engine power, ensuring compliance with the Energy Efficiency Existing Ship Index (EEXI).

Digitalization for voyage optimization and predictive maintenance is essential to reduce fuel consumption and minimize off-hire days

Digitalization is the operational side of efficiency. International Seaways is using advanced digital tools for real-time voyage optimization, which is crucial for managing fuel consumption. These systems use machine learning and real-time weather data to calculate the most fuel-efficient route and speed, often cutting fuel consumption by up to 10 percent on a single voyage. This is a low-capex way to boost the bottom line and improve the CII rating.

Predictive maintenance is the other half of the digital equation. Instead of fixing equipment after it breaks (reactive maintenance), sensor data and analytics predict when a component, like a main engine part, is likely to fail. This allows the company to schedule maintenance during planned drydocks, minimizing unscheduled off-hire days. For a VLCC earning an average of around $60,000 per day in a strong market, every off-hire day avoided is direct profit protected.

The company is actively studying next-generation fuels, such as e-fuels and carbon capture, which aren't yet available at scale

While LNG-ready vessels are a strong near-term solution, the long-term technological challenge is the transition to net-zero fuels. International Seaways is actively studying next-generation fuels (e-fuels), such as e-ammonia and e-methanol, and onboard carbon capture technology. This is a forward-looking risk mitigation strategy, as the International Maritime Organization (IMO) has an ambition to increase the uptake of zero or near-zero Greenhouse Gas (GHG) emission technologies to at least 5% (striving for 10%) of the energy used by international shipping by 2030.

The technological hurdle here is one of scale and maturity. E-fuel production pathways, which require Direct Air Capture (DAC) of CO2, are not yet technologically advanced enough for mass market entry in 2025. Similarly, while carbon capture is a viable retrofit option for older vessels, it faces practical challenges, such as the need for significant onboard tank space, which reduces cargo capacity and, therefore, revenue.

International Seaways, Inc. (INSW) - PESTLE Analysis: Legal factors

The European Union Emissions Trading System (EU ETS) is fully phasing in by 2026, making carbon a direct cost for all vessels calling at EU ports.

You need to see the EU ETS (Emissions Trading System) not as a future risk but as a current, quantifiable operating cost that is rapidly escalating. In 2025, the system requires shipping companies to surrender allowances for 70% of their verified carbon dioxide (CO₂) emissions for voyages related to EU/EEA ports, a significant jump from 40% in 2024. This is not a tax you can defer; it's a direct price on carbon that impacts every vessel in the International Seaways, Inc. (INSW) fleet that touches Europe.

The real financial bite comes in 2026 when the coverage hits 100% and the system expands to include methane (CH₄) and nitrous oxide (N₂O). Analysts project the price of an EU Allowance (EUA) could range between €60 and €150 per metric ton of CO₂ in 2026, depending on market conditions. Here's the quick math: an average bulk vessel trading within the EU could see its annual operating cost increase by an estimated €1.3 million in 2026 just from this one regulation. Companies like INSW with modern, fuel-efficient fleets are defintely better positioned to manage this cost, but even they must track and pass on these expenses to charterers through specific ETS surcharges.

This legal structure forces an immediate strategic decision: pay the carbon cost or invest in fleet upgrades. It's that simple.

EU ETS Phase-in Schedule (Maritime)	Emissions Coverage	Key Financial Impact (2025/2026)
2024 (Completed)	40% of verified CO₂ emissions	Initial compliance costs and surcharge implementation.
2025 (Current Year)	70% of verified CO₂ emissions	Surcharges for shippers could nearly double from 2024 levels.
2026 (Full Phase-in)	100% of CO₂, CH₄, N₂O emissions	Projected EUA price range: €60-€150/tonne CO₂. Annual cost increase up to €1.3 million per average vessel.

International Maritime Organization (IMO) regulations, including the Carbon Intensity Indicator (CII) and Energy Efficiency Existing Ship Index (EEXI), create a two-tier market favoring modern, efficient vessels.

The IMO's technical and operational regulations are creating a clear two-tier market, where the vessel's environmental rating directly dictates its charter value and market access. The Energy Efficiency Existing Ship Index (EEXI) is a one-time technical measure, and its limits became 5% stricter from January 1, 2025, forcing older, non-compliant vessels to undergo engine power limitation (EPL) or face operational restrictions.

More critically, the Carbon Intensity Indicator (CII) measures operational efficiency, assigning an annual rating from A (best) to E (worst). For 2025 charter contracts, we're seeing a significant trend: charterers are increasingly demanding a minimum C-rating or better. A poor rating isn't just a regulatory headache; it's a commercial liability.

• D/E Rating Risk: Vessels with D ratings for three consecutive years or an E rating in any year must submit a corrective action plan to the flag state.
• Asset Devaluation: Older bulkers and tankers with D/E ratings are seeing their resale value drop by 10-15% in the 2025 Sale & Purchase market.
• Charter Party Clauses: Standard contracts now incorporate BIMCO CII clauses, shifting performance risk to the owner and often including performance-based incentives for A/B rated vessels.

This legal framework means that a well-maintained, modern fleet, like the one INSW operates, commands a premium time charter rate, giving it a tangible competitive edge over older tonnage.

Mandatory training for seafarers on preventing and addressing violence and harassment is being incorporated into the Standards of Training, Certification and Watchkeeping (STCW) Code.

The legal landscape is shifting to prioritize crew welfare and psychological safety, which directly impacts a company's reputation and operational risk. The IMO adopted amendments to the Standards of Training, Certification and Watchkeeping (STCW) Code, specifically Resolution MSC.560(108), to mandate training on the prevention of and response to violence and harassment, including sexual harassment, bullying, and sexual assault.

While the official entry into force is set for January 1, 2026, the preparatory work is happening now in 2025. Shipping companies are required to implement formal Harassment and Bullying Prevention Policies and ensure all seafarers taking or renewing their Basic Safety Training receive the updated instruction. This isn't just a paper exercise; it's about mitigating legal exposure from crew claims and maintaining high retention rates in a tight labor market.

Compliance with the International Safety Management (ISM) Code and other international conventions is non-negotiable for securing high-value charters.

The International Safety Management (ISM) Code, which requires a Safety Management System (SMS) to ensure safe operations and pollution prevention, remains the foundational legal requirement for all commercial vessels. For a tanker company like INSW, compliance is the price of entry for high-value charters with major oil companies and commodity traders, who conduct rigorous vetting processes (e.g., SIRE inspections).

The market for ISM Code Safety solutions-which includes digital safety management systems, automated compliance tracking, and specialized crew training-is substantial, valued at approximately $38 billion in 2025 and projected to grow at a 12.50% CAGR through 2033. This shows the industry's increasing investment in verifiable safety compliance. Non-compliance risks Port State Control (PSC) detentions, which can instantly break a charter and severely damage a company's commercial reputation.

High compliance standards translate directly into premium earnings. For example, during the first half of 2025, the average time charter rates for Medium Range (MR2) tankers, a key segment for product carriers, stood at just over USD 20,100/day, and only the most reliable, ISM-compliant vessels can consistently secure these top-tier rates.

International Seaways, Inc. (INSW) - PESTLE Analysis: Environmental factors

The IMO's revised strategy targets net-zero Greenhouse Gas (GHG) emissions by or around 2050, requiring a massive shift away from traditional fossil fuels.

The International Maritime Organization (IMO) has set a clear, long-term goal for the shipping industry: achieving net-zero Greenhouse Gas (GHG) emissions by or around 2050. This 2023 IMO Strategy on the Reduction of GHG Emissions from Ships mandates a fundamental shift away from conventional fossil fuels, creating a massive capital expenditure requirement across the industry.

The IMO's strategy includes critical indicative check-points for international shipping's decarbonization pathway, measured against 2008 levels. Here's the quick math on the near-term and mid-term targets:

• By 2030: Reduce total annual GHG emissions by at least 20% (striving for 30%).
• By 2040: Reduce total annual GHG emissions by at least 70% (striving for 80%).
• By 2030: Ensure zero or near-zero GHG emission fuels represent at least 5% (striving for 10%) of the energy used.

While the draft 'IMO Net-Zero Framework' for mandatory measures was approved in April 2025, its formal adoption was delayed. Still, the direction of travel is fixed, and the regulatory framework is expected to enter into force by March 2028 at the earliest, making future fuel costs defintely higher as low-emission fuels are typically three to four times more expensive than conventional options.

The FuelEU Maritime Regulations, formally adopted in 2025, mandate a gradual reduction in the GHG intensity of ships' fuel.

The European Union's FuelEU Maritime Regulation, which became fully applicable on January 1, 2025, is the most immediate regulatory pressure point for International Seaways. This regulation sets progressively stricter limits on the annual average GHG intensity of energy used by ships over 5,000 gross tonnes calling at EU ports, regardless of their flag. The baseline for compliance is the 2020 average Well-to-Wake (WtW) GHG intensity of 91.16 gCO2e/MJ.

The mandated reduction trajectory starts immediately, creating an operational challenge for any vessel trading into the EU/EEA. Non-compliance from 2025 can result in a penalty of approximately EUR 30 per tonne of VLSFO-equivalent.

Compliance Year	Required GHG Intensity Reduction (vs. 2020 Baseline)
2025	-2%
2030	-6%
2035	-14.5%
2040	-31%
2050	-80%

This regulation applies to 100% of the energy used on voyages between EU/EEA ports and 50% of the energy used on voyages between an EU/EEA port and a third country, so International Seaways must start monitoring and reporting key data from the 2025 fiscal year.

Charterers are increasingly favoring vessels with A-C CII ratings, creating a risk of discounted rates for less efficient D and E-rated ships.

The IMO's Carbon Intensity Indicator (CII) rating system is now a core commercial factor, moving beyond a mere compliance issue. The required CII is lowered each year, with the 2025 threshold requiring a 9% cut from 2019 levels of carbon intensity. Charterers-the customers-are actively integrating these ratings into their vessel selection criteria to meet their own Scope 3 emissions targets.

A vessel with an A or B rating is viewed as superior and can command premium charter rates, while a low rating (D or E) carries a real risk of commercial loss. Specifically, a low CII rating can result in:

• Market losses due to lower hire rates/freight.
• Loss of future fixtures (chartering contracts).
• Reduced ship re-sale value.

If a ship receives a D rating for three consecutive years or an E rating in any single year, the owner must submit a corrective action plan, which can constrain the vessel's commercial operation. This is a direct, near-term commercial risk that International Seaways must manage.

International Seaways' fleet optimization, selling older vessels (average age 17.7 years) and acquiring newer tonnage, directly mitigates environmental compliance risk.

International Seaways is actively managing this environmental risk through a disciplined fleet optimization program in the 2025 fiscal year. This strategy focuses on divesting older, less efficient tonnage and replacing it with modern, compliant vessels, which is the only way to stay ahead of the regulatory curve.

The company's actions in the first three quarters of 2025 demonstrate this focus:

• Vessel Sales: Sold or agreed to sell eight older vessels (MR and LR1 product tankers) with an average age of 17.7 years. These sales are expected to generate approximately $104 million in total proceeds ($67 million realized from five vessels and $37 million expected from three more).
• New Tonnage Acquisition: Agreed to purchase a 2020-built, scrubber-fitted VLCC for $119 million, which is a modern, more efficient vessel.
• Newbuilding Deliveries: Took delivery of the first two of six new LR1 product tankers, which are all scrubber-fitted and dual-fuel (LNG) ready, part of a total newbuilding contract valued at approximately $359 million.

This capital allocation strategy directly lowers the fleet's average age toward management's target of about 10 years old, positioning the company's fleet in the sweet spot for future CII compliance and premium charter rates.