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In world with too much crude oil, 1,100-foot steel monsters rule

The most destructive oil crash in a generation is giving ship owners a billion-dollar windfall. With the Organization of Petroleum Exporting Countries abandoning output limits in a drive for market share, ships that carry as much as two million barrels a trip are in demand to haul crude from the Middle East to Asia and North America. While oil price

The most destructive oil crash in a generation is giving ship owners a billion-dollar windfall.

With the Organization of Petroleum Exporting Countries abandoning output limits in a drive for market share, ships that carry as much as two million barrels a trip are in demand to haul crude from the Middle East to Asia and North America. While oil prices fell about 35 percent in 2015, average earnings for these carriers jumped to $67,366 a day, the most since at least 2009, according to Clarkson Plc, the world's largest shipbroker.

"The stars are aligned for us right now," said Nikolas Tsakos, the chief executive officer of Tsakos Energy Navigation Ltd., adding that falling oil prices will likely stimulate demand and cargoes next year.

Tanker analysts are predicting that the rate boom will persist for many of the same reasons oil forecasters are bearish. OPEC shows no sign of reversing its market strategy, and Iran has outlined plans to ramp up its exports once economic sanctions against the country are lifted. At the same time, the United States just repealed a four-decades old limit on its exports.

With on-land inventories already at record levels, this could mean more barrels will eventually be stored on ships, further increasing profit, said Tsakos.

The biggest tanker operators who manage fleets from Europe are Euronav NV, based in Antwerp, Belgium; DHT Holdings Inc. headquartered in Bermuda; Frontline Management AS, which runs Norway-born billionaire John Fredriksen's tanker fleet; and Tsakos Energy in Greece. All have seen their shares rise this year while most energy producers have fallen.

"We are benefiting from what is currently a challenging environment for the energy sector," said Svein Moxnes Harfjeld, joint chief executive officer for DHT, in an email. "We expect 2016 to be a rewarding year."

Tsakos, whose company gained 4.3 percent in New York trading this year through Tuesday, said the increase should have been higher, given that "the underlying business is doing very well." Too often, tankers are lumped in with other oil industry services in the minds of investors, he said.

"Investors look at tankers as an oil service, which we are," Tsakos said. "But I think very few have identified that this side over here is the only oil service that's positively affected by the dropping oil prices. I hope in the new year that this will be recognized, and our share prices are moving in the right direction."

While rates are forecast to slip in 2016, the ships will still earn $46,400 a day, the second best year since 2009, according to the median of six analysts surveyed by Bloomberg and historical data from Clarkson. The average carrier is about 332 meters long, or almost 1,089 feet, data from IHS show. The carriers' earnings will more than double this year, according to analyst estimates compiled by Bloomberg. The extra rates would work out at more than $5 billion in additional revenues if applied across the entire fleet.

"A scenario in which crude oil prices are suppressed across 2016 could lead to a boom in tanker earnings of comparable magnitude to 2007-08," said Tim Smith, senior analyst at Maritime Strategies International, said in a report.

About 40 percent of the world's crude oil is shipped by sea.