Belgian oil tanker and storage operator Euronav on Thursday reported a 30% increase in first-quarter profit, helped by higher freight rates and trade disruptions from the war in Ukraine, but flagged risks of weaker crude demand.

Euronav, which provides crude oil shipping and storage services, said it was set to benefit further from rising oil production and dislocations caused by geopolitical events.

“The conflict in Ukraine has driven considerable dislocation in tanker market freight patterns as sanctions and so-called self-sanctioning by market participants has driven ton-mile growth,” CEO Hugo De Stoop said.

Ton-mile is an industry measure incorporating volumes and distance.

The Antwerp-based group, however, warned of some headwinds, pointing to the International Energy Agency’s lower forecast for 2022 crude demand and low scrapping levels for older ships.

Despite record steel prices, only seven vessels left its fleet this year, with many carriers that should have been recycled still engaged in the illicit Iranian crude trade, Euronav said.

Western countries are seeking to revive the 2015 pact limiting Iran’s nuclear programme, which would allow them to lift the embargo on the country’s oil sector.

Euronav’s proportionate core earnings (EBITDA) reached $42.9 million in the first quarter.

Analysts at KBC said that while the earnings beat their estimates, vessel supply remained a main concern.

“The waiting game for an effective uptake in scrapping continues,” KBC said in a note to clients.

Euronav shares were down 3.2% at 0933 GMT in a broadly lower market.

So far in the second quarter, 43% of available days for the very large crude carrier (VLCC) fleet have been fixed at an average price of $14,000 per day, with Suezmaxes at $19,700 for 44% of fleet days.

DNB analyst Jorgen Lian attributed the fall to the group’s second-quarter spot rate indications which it said lagged peers and implied a potential 20% cut to current consensus due to elevated market expectations.

The results came ahead of a pivotal general meeting on May 19, where investors will vote on directors amid a dispute with the group’s majority shareholder, which opposes a planned merger with Frontline.

Marex Media