We at Pyxis believe that our modern eco-efficient mid-sized vessels, operated safely and well maintained by our managers, lead to attractive chartering arrangements and cost-effective return on capital for the benefit of our shareholders.
Product Tanker Sector
Primarily, we address the worldwide market for the marine transportation of refined petroleum products, which is driven in turn by demand for transportation fuels, including gasoline, diesel/gas oil, jet/kerosene and naphtha. We believe that fundamental population growth combined with increasing per capita incomes and further industrialization will lead to long-term demand growth globally for transportation fuels. In recent times, major armed hostilities have had a significant impact on the product tanker sector. The invasion of Ukraine by Russia in February, 2022 shocked the global energy markets. As a member of OPEC+, Russia has been a major producer of crude oil at 11.4 million barrels/day as of February 2022 of which ~8 Mb/d were exported. At that time, Russia exported 2.85 Mb/d of refined petroleum products of which 1.5 Mb/d went to Europe. As a result of this war, many countries introduced a broad range of sanctions on Russian entities, individuals, goods and commodities, including petroleum products, which has affected global trade and relationships. Further, the EU and G-7 group of 27 countries ban on the importing of Russian refined products and price caps went into effect in February, 2023. The Russian/Ukrainian war and the more recent Middle East conflicts have caused major disruptions in the global oil markets, changing trade patterns, supply dislocations of refined products, expansion of ton-miles and higher charter rates. Inventories of certain refined products remain below 5 year averages in a number of locations. In July, 2025, the IMF slightly revised its estimate for global GDP growth for 2025-26 to average ~3% per year due to the effect of tariffs and the prospect of rising inflation which should adversely impact economic activity. In September, the IEA reduced its estimate for global oil consumption to increase 0.7 Mb/d or less than 1% per year, to reach 104.4 Mb/d by 2026.
As an indicator of improving demand, OPEC+ announced starting this Spring that it would accelerate the full return of its 2.46 Mb/d voluntary oil production cuts by October, 2025. At the same time, additional sanctions on Russia along with expanded U.S. led restrictions on Iran and Venezuela, could limit petroleum exports, primarily to Asia, curb the employment of the “Dark Fleet”, which should increase demand for compliant tankers. This past Summer, the EU announced its 18th round of sanctions against Russia and its related entities. A deeper price cap on Russian oil will be in place this Fall, and starting in 2026, the EU will ban imports of refined products derived Russian crude.
Overall, crude supply is estimated to rise 2.7 Mb/d to average 105.8 Mb/d this year and another 2.1 Mb/d in 2026, due to greater production of Non-OPEC+ countries in the Americas and the OPEC+ unwind. Recently, the EIA reported that U.S. oil production averaged 13.4 Mb/d, an increase of 1% over the prior year. Modest demand growth combined with ample crude supply should lead to subdued oil prices through 2026, barring the impact of geo-political events.
The global economic environment continues to be very fluid, complex and volatile. The recent introduction of tariffs, led by the U.S., combined with continued restrictive monetary policies have resulted in slowing economic activity in many parts of the world, the expectation of rising inflation later this year and higher market volatility. However, in July, 2025, the trade agreement between the U.S. and EU included the potential purchase of $750 billion of U.S. energy products over the next three years, representing a tailwind for tanker demand. The outlook in the short-term will be dependent of the impact of de-stabilizing geo-political events and macro-economic conditions, led by the Russian/Ukrainian war, and the uncertain implications of the Israeli/Hamas/ Houtis/ Iran conflicts in the Middle East. Starting in January, 2024, the Red Sea conflicts has negatively impacted shipping with re-routing from the Suez Canal around the Cape of Good Hope (“COGH”), expanding market dislocation and further increasing ton-miles. In 2024, transits through the Suez were down 50% vs. 2023. Typically, voyages around the COGH add 15 sailing days from ports in the Arabian Sea to Europe vs. the Suez Canal passage. In 2024, ton-miles increased 3.7% while the average voyage distance rose 2.8% to 3,476 miles according to Drewry, a well-respected independent research firm.
The United States, Asia and Middle East are the largest exporters of refined products, accounting for over half of total exports. Refining capacity, inventory levels, domestic demand and worldwide arbitrage opportunities can influence the movements within these regions. In the past, global shifts in refining capacity and the increase in U.S. crude oil production, led by the rapid expansion of shale-based oil, have been positives for demand of product tankers. Global refinery conditions have recently improved, evidenced by higher crack spreads and rising utilization. Global throughput is forecasted to increase slightly to an average of 83.5Mb/d in 2025, according to the IEA.
Changes in refinery locations have also led to further ton-mile demand for product tankers. The emergence of export-oriented, more efficient mega-refineries located near the well-head, e.g., the Middle East, and the reduction of OECD (namely in Europe, Japan and Australia) refining capacity are examples of factors that influence locations of refineries. In September 2025, Drewry estimated that 2.5 Mb/d of new capacity (net) is scheduled to come on line between 2025-2030, virtually all non-OECD.
Product tankers are differentiated by their coated cargo tanks, predominately epoxy-based paint, which minimize any corrosion from refined petroleum products and facilitate the rapid cleaning of cargo holds. Based on carrying capacity, the worldwide product tanker fleet ranges from small tankers under 10,000 deadweight tons (or dwt) carrying capacity to 120,000 dwt. A main group of vessels transporting the majority of cargoes consists of 3,254 product tankers which range from 10,000 to 80,000+ dwt and aggregate over 184.4 million dwt as of August 31, 2025 according to Drewry. Our area of focus, the Medium Range (or MR2) category represents the largest total carrying capacity at 46.3% (dwt) of the product tanker sector. MRs are considered the workhorse and usually operate in the Atlantic and Pacific basins. Customers include major integrated and national oil companies, international commodity trading firms and refiners.
The MR2 tanker supply outlook is mixed. New orders for construction of product tankers increased significantly in 2023-24, but has dramatically slowed in 2025. The long-anticipated scrapping of older, less efficient tankers continues to be postponed. The growth in the supply of product tankers is primarily related to new build (“NB”) orders, usually placed at Asian shipyards, and demolition of older tonnage. Aggressive new orders for other types of ships, such as containerships and gas carriers, have resulted in delivery slots for new MR2 product tanker orders being pushed to Q4 2027 or later. The placement of orders for NB’s is primarily a function of a shipowner's outlook for demand for such vessels (i.e., future charter rates), construction costs and availability at the yard, age of the existing fleet as well as cost and availability of funding. NB prices for MR2s have recently softened to ~$49 million, exclusive of higher specifications, yard supervision and spares. Other decision-making factors for an owner include developments in ship and engine design, scrubbers, stricter environmental regulations, as well as the availability and pricing of alternative low-carbon fuels. Product tankers have an expected operating life of 25 years, but certain major charterers have lower age restrictions.
According to Drewry, the orderbook (“OB”) was 14.7% or 259 tankers of a worldwide fleet of 1,767 MR2s as of August 31, 2025. But the pace of new orders has slowed dramatically to only 18 YTD. Delays in new build deliveries continued in 2024 as only 46 MRs were delivered. During 2023-2024, slippage averaged 11.5% of initial yearly forecasts according to Drewry. Importantly, there were 312 MR2s, or 17.7% of the global fleet over 20 years of age, larger than the OB. Despite the number of old MR2s, demolition continues to very low by historical standards. Only one MR2 was scrapped in 2024 due to robust chartering conditions for most of the year and strong asset values, and only five tankers YTD 2025. During the 5 years ended 2024, an average of 10 tankers were demolished every year. Slowing economic activity globally resulted in softer charter rates starting 2H 2024 and lower prices for second-hand tankers. Expanding environmental regulations, higher compliant bunker fuel prices, increasing running costs, reasonable scrap prices and vessel aging should result in more demolitions of older tankers over the long term. For 2025, we estimate that annual fleet growth of 5-6%, net of vessel scrapping and delays in MR2 newbuild deliveries.
Tanker operations and vessels are significantly regulated by international conventions, such as SOLAS and MARPOL, class requirements, various governmental health, safety and environmental laws and regulations, including OPA and CERLA, IMO regulations and by other jurisdictions. IMO regulations governing CO2 emissions, including Energy Efficiency Existing Index (EEXI) and Carbon Intensity Indicator (CII), which started in 2023, may lead to a reduction /limitation of available vessels This year, the IMO is seeking passage of Net-Zero regulations under MEPC 83. If implemented, further carbon reductions would start in 2028, and non-compliant vessels would see material penalties. Consequently, older, less efficient vessels would be at a competitive disadvantage, resulting in slower speeds, lower utilization and higher running costs, as well as fragmentation in chartering. The independent classification societies certify that a vessel has been built and maintained in accordance with established rules and regulations, including periodic inspections and surveys of the vessel. In addition, many charterers have established certain standards to employ vessels carrying refined products guaranteed by strict vetting processes. Consequently, quality vessels and flawless operations are paramount within the product tanker industry.
Dry Bulk Sector
We own controlling interests in three modern mid-sized eco- efficient dry bulkers. Through a 60% equity interest, we control a single ship joint venture which owns a 2016 Japanese built 63,250 dwt. scrubber-fitted Ultramax dry bulk vessel which was purchased in September, 2023. In February, 2024, we acquired a 2015 built Chinese built 83,013 dwt. scrubber-fitted Kamsarmax (KMAX) carrier, and in late June, 2024, we closed a similar joint venture investment in a sister ship. These strategic investments into the dry bulk sector are supported by counter-cyclical fundamentals, and to a lesser extent, counter seasonal activity, in contrast to the product tanker sector and should provide attractive long term returns to our shareholders. Our management and Board members have extensive experience in owning and operating dry bulk carriers.
At this point, dry bulk supply/demand fundamentals indicate a modest rebound from depressed market conditions earlier this year. Demand growth for many dry bulk commodities, primarily consisting of iron ore, coal, gains and minor bulk materials, is moderately tied to global GDP growth which is expected to increase 3%%/yr. on average through 2026. Growth in Chinese GDP has been revised to 4.8% in 2025 and 4.2% for next year which would typically impact imports of iron ore and coal. In May, 2025 Drewry forecasted total dry bulk demand growth of 2.4% for 2025, with a compounded annual growth rate (“CAGR”) for 2024-30 of 2.5%. Specifically, it estimated long-term CAGR for certain minor bulk commodities such as grains at 2.1% and bauxite at 8%. Led largely by China, the global energy transition is resulting in greater shipments of bauxite and thermal coal for electrification.
As of August 31, 2025, Drewry estimated the orderbook at 114 M dwt. or 10.8% of the worldwide fleet of dry bulk tonnage of 1.054B tons. It estimated the orderbook for Kamsarmax carriers at 398 or 25.2% of the global fleet of 1,582 bulkers with 13.1% NB deliveries scheduled for the remaining 4 months of 2025. The orderbook for the modern Ultramax class stood at 400 units or 25.8% of the global fleet of 1,552 vessels with 61 NB deliveries scheduled for the remainder of the year. According to Drewry (September, 2025), 68% of NB orders were with Chinese shipyards. During 2023-24, annual delays in NB deliveries were 28.5% for Kamsarmax and 4.5% for Ultramax. Despite the relatively younger age of these class of bulkers, a continuation of sluggish chartering conditions combined with higher running costs and greater regulatory/environmental compliance of old ships may increase the activity level of demolitions. Starting in 2H 2024, prices for bulk carriers materially declined; but recently, the values for second-hand Kamsarmax and Ultramax have normalized towards 5 year averages.
September, 2025