International Seaways, Inc. (INSW)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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INTRODUCTION

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This MD&A, which should be read in conjunction with our accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” provides a discussion and analysis of our business, current developments, financial condition, cash flows and results of operations. It is organized as follows:

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A detailed discussion of the 2023 to 2022 year-over-year changes is not included herein and can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 filed on February 29, 2024.

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GENERAL

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We are a provider of ocean transportation services for crude oil and refined petroleum products. We operate our vessels in the International Flag market. Our business includes two reportable segments: Crude Tankers and Product Carriers. For the years ended December 31, 2024 and 2023 we derived 53% and 51%, respectively, of our TCE revenues from our Product Carriers segment. Revenues from our Crude Tankers segment constituted the balance of our TCE revenues during these periods.

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As of December 31, 2024, the Company’s operating fleet consisted of 78 wholly-owned or lease financed and time chartered-in vessels aggregating 9.1 million deadweight tons (“dwt”). In addition to our operating fleet of 78 vessels, six LR1 newbuilds are scheduled for delivery to the Company between the second half of 2025 and third quarter of 2026, bringing the total operating and newbuild fleet to 84 vessels. Our fleet includes VLCC, Suezmax and Aframax crude tankers and LR2, LR1 and MR product carriers.

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The Company’s revenues are highly sensitive to patterns of supply and demand for vessels of the size and design configurations owned and operated by the Company and the trades in which those vessels operate. Rates for the transportation of crude oil and refined petroleum products from which the Company earns a substantial majority of its revenues are determined by market forces such as the supply and demand for oil, the distance that cargoes must be transported, and the number of vessels expected to be available at the time such cargoes need to be transported. The demand for oil shipments is significantly affected by the state of the global economy, levels of U.S. domestic and international production and OPEC exports. The number of vessels is affected by newbuilding deliveries and by the removal of existing vessels from service, principally through storage, recycling or conversions. The Company’s revenues are also affected by its vessel employment strategy, which seeks to achieve the optimal mix of spot (voyage charter) and long-term (time or bareboat charter) charters. Because shipping revenues and voyage expenses are significantly affected by the mix

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between voyage charters and time charters, the Company measures the performance of its fleet of vessels based on TCE revenues. Management makes economic decisions based on anticipated TCE rates and evaluates financial performance based on TCE rates achieved. In order to take advantage of market conditions and optimize economic performance, management employs all of the Company’s LR1 product carriers, which currently participate in the Panamax International pool, in the transportation of crude oil cargoes.

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Our revenues are derived predominantly from spot market voyage charters and our vessels are predominantly employed in the spot market via market-leading commercial pools. We derived approximately 86% and 91% of our total TCE revenues in the spot market for the years ended December 31, 2024 and 2023, respectively. The future minimum revenues, before reduction for brokerage commissions, expected to be received on non-cancelable time charters for three VLCCs, one Suezmax, one Aframax, one LR2 and eight MRs as of December 31, 2024 are as follows:

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Russian-Ukraine Conflict

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The ongoing military conflict in Ukraine has had a significant direct and indirect impact on the trade of crude oil and refined petroleum products. This conflict has resulted in the United States, United Kingdom, and the European Union, among other countries, implementing sanctions and executive orders against citizens, entities, and activities connected to Russia. Some of these sanctions and executive orders target the Russian oil sector, including a prohibition on the import of oil from Russia to the United States or the United Kingdom, and the European Union's ban on Russian crude oil and petroleum products which took effect in December 2022 and February 2023, respectively.

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Russia’s invasion of Ukraine also led to a disruption in supply chains for crude oil and refined petroleum products, changing volumes and trade routes, thus increasing ton-mile demand for the seaborne transportation of both crude oil and refined petroleum products, which resulted in a prolonged spike in freight rates. Self-sanctioning by Western oil majors and many ship owners resulted in disrupted product flows, primarily diesel, from Russia to Europe, while high arbitrage spreads incentivized Middle Eastern and U.S. diesel flows to Europe, increasing ton-mile demand for vessels.

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The U.S., EU nations and other countries could impose wider sanctions and take other actions. Further sanctions imposed or actions taken by the U.S., EU nations or other countries, and retaliatory measures by Russia in response, could lead to increased volatility in global oil demand, which could have a material impact on our business, results of operations and financial condition. In addition, it is possible that third parties with which we do business may be impacted by events in Russia and Ukraine, which could adversely affect us. See Item 1A, Risk Factors – Terrorist attacks and international hostilities and instability can affect the tanker industry, which could adversely affect INSW’s business.

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Red Sea Attacks

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The ongoing military conflict between Israel and Hamas has had a direct and indirect impact on the trade of crude oil and refined petroleum products. Heightened security risks because of attacks on merchant vessels transiting through the Red Sea to or from the Suez Canal has led to an increase in ton-mile demand for vessels as more vessel owners are opting to re-route their vessels around the Cape of Good Hope. See Item 1A, Risk Factors – Terrorist attacks and international hostilities and instability can affect the tanker industry, which could adversely affect INSW’s business.

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OPERATIONS AND OIL TANKER MARKETS

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The International Energy Agency (“IEA”) estimates global oil consumption for the fourth quarter of 2024 at 104.0 million barrels per day (“b/d”), up 1.5% from the same quarter in 2023. The estimate for global oil consumption for 2025 is 104.0 million b/d, an increase of 1.1% over the 2024 estimate of 102.9 million b/d. OECD demand in 2025 is estimated to remain unchanged at 45.7 million b/d, while non-OECD demand is estimated to increase by 1.9% to 58.3 million b/d.

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Global oil production in the fourth quarter of 2024 was 102.9 million b/d, an increase of 0.1 million b/d from the fourth quarter of 2023. OPEC crude oil production averaged 26.7 million b/d in the fourth quarter of 2024, unchanged from the third quarter of 2024, and an increase of 0.2 million b/d from the fourth quarter of 2023. Non-OPEC production increased by 0.1 million b/d to 70.6 million b/d in the fourth quarter of 2024 compared with the fourth quarter of 2023. Oil production in the U.S. of 13.5 million b/d in the fourth quarter of 2024 increased by 2.0% from the third quarter of 2024 and by 2.3% from the fourth quarter of 2023.

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U.S. refinery throughput decreased by 0.4 million b/d to 16.5 million b/d in the fourth quarter of 2024 compared with the third quarter of 2024. U.S. crude oil imports in the fourth quarter of 2024 increased by 0.2 million b/d to 6.4 million b/d compared with the fourth quarter of 2023, with imports from OPEC countries increasing by 0.1 million b/d and imports from non-OPEC countries increasing by 0.1 million b/d.

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China’s crude oil imports for 2024 decreased 1.9%, or 0.2 million b/d, to 11.0 million b/d, compared with 2023. Excluding years impacted by COVID, this is the first annual decrease in Chinese crude oil imports in approximately 20 years.

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OECD commercial crude inventories in the fourth quarter of 2024 decreased by 3.2%, or 43 million barrels, compared with the third quarter of 2024. OECD commercial product inventories in the fourth quarter of 2024 increased by 1.7%, or 24 million barrels, compared with the third quarter of 2024.

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During the fourth quarter of 2024, the tanker fleet of vessels over 10,000 dwt increased, net of vessels recycled, by 1.1 million dwt. The crude fleet increased by 0.5 million dwt, with VLCCs decreasing by 0.6 million dwt and Suezmaxes and Aframaxes increasing by 0.6 million dwt and 0.5 million dwt, respectively. The product carrier fleet increased by 0.6 million dwt, all in the MR fleet. Year-over-year, the size of the tanker fleet increased by 5.5 million dwt with the VLCCs decreasing by 0.6 million dwt and Suezmaxes, Aframaxes, and MRs increasing by 1.1 million dwt, 2.5 million dwt, and 2.5 million dwt, respectively. The LR1/Panamax fleet remained unchanged.

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During the fourth quarter of 2024, the tanker orderbook increased by 2.9 million dwt overall compared with the third quarter of 2024. The crude tanker orderbook increased by 1.7 million dwt. The VLCC orderbook increased by 1.8 million dwt and the Suezmax orderbook decreased by 0.2 million dwt. The product carrier orderbook increased by 1.2 million dwt, with increases in the LR1 and MR sectors of 0.5 million dwt and 0.7 million dwt respectively. Year-over-year, the total tanker orderbook increased by 45.2 million dwt, with increases in VLCC, Suezmaxes, Aframaxes, Panamaxes and LR1s of 18.8 million dwt, 5.5 million dwt, 8.3 million dwt, 2.6 million dwt and 10.0 million dwt, respectively.

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Tanker rates in general held steady in the fourth quarter compared with the third quarter. VLCCs and Suezmaxes in particular saw some weakness toward the end of the fourth quarter. In January, newly announced sanctions on dark fleet tankers created some strength in these sectors, although it will take time to determine the actual impacts. The weaker Chinese economy remains an impediment to stronger rates, and political uncertainty could have an impact on rates, either positive or negative. Even so, rates remain significantly over cash breakeven levels, reflecting the continuing impact of the disruptions in trade flows on tanker demand.

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RESULTS FROM VESSEL OPERATIONS

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During 2024, income from vessel operations decreased by $160.2 million to $455.2 million from $615.4 million in 2023. Such decrease resulted principally from a year-over-year decrease in TCE revenues and increased depreciation and amortization and vessel expenses in the current year.

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The decrease in TCE revenues in 2024 of $122.4 million, or 12%, to $933.1 million from $1,055.5 million in 2023 primarily reflects (i) a net aggregate rates-based decrease of $103.6 million resulting from lower average daily rates in the Crude tanker and LR1 fleets, partially offset by strengthened rates in the LR2 and MR sectors, and (ii) a $31.6 million days-based decline in the LR1 fleet due to a smaller time chartered-in portfolio and 133 more off-hire days during the current year, partially offset by (iii) a $10.7 million days-based increase in the VLCC fleet resulting from the delivery of three dual-fuel VLCC newbuilds between March 2023 and May 2023, and (iv) a $5.7 million increase attributable to the Company’s Lightering business.

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The following tables provide a quarterly trend analysis of spot TCE rates earned between the fourth quarter of 2023 and 2024 by our Crude Tankers and Product Carriers fleet. See the “Operations and Oil Tanker Markets” discussion above for a description of the market factors that impacted the quarterly trend of spot rates during 2024.

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See Note 4, “Business and Segment Reporting,” to the Company’s consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information on the Company’s segments, including reconciliations of (i) time charter equivalent revenues to shipping revenues and (ii) adjusted income from vessel operations for the segments to income before income taxes, as reported in the consolidated statements of operations.

Crude Tankers

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The following table provides a breakdown of TCE rates achieved for the years ended December 31, 2024 and 2023 between spot and fixed earnings and the related revenue days. The information is based, in part, on information provided by the commercial pools in which the segment’s vessels participate and excludes commercial pool fees/commissions averaging approximately $982 and $973 per day in 2024 and 2023, respectively, as well as activity in the Crude Tankers Lightering business and revenue and revenue days for

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which recoveries were recorded by the Company under its loss of hire insurance policies. The fixed earnings rates in the table are net of broker/address commissions.

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During 2024, TCE revenues for the Crude Tankers segment decreased by $75.1 million, or 15%, to $437.1 million from $512.2 million in 2023. Such decrease principally resulted from (i) an aggregate rates-based decrease in the VLCC, Suezmax and Aframax fleets of $90.5 million due to lower average daily blended rates in these sectors and (ii) a $3.7 million days-based decrease in the Aframax fleet, which reflected 87 more off-hire days in the current year. These decreases were partially offset by (iii) a $10.7 million days-based increase in the VLCC fleet, which reflected the delivery of three dual-fuel LNG VLCC newbuilds between March 2023 and May 2023, partially offset by 80 more off-hire days in the current year, (iv) a $5.7 million increase in the Crude Tankers Lightering business, and (v) a $2.7 million days-based increase in the Suezmax sector resulting from 45 fewer off-hire days in the current year.

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Vessel expenses increased by $14.4 million to $130.1 million in 2024 from $115.7 million in 2023. The VLCC newbuild deliveries described above resulted in $3.2 million of incremental vessel expense in the current year. The remainder of the increase primarily reflects increased costs for repairs and renewals, off-hire fuel, transportation and crew. Charter hire expenses increased by $2.5 million to $14.3 million in 2024 from $11.9 million in 2023. The increase relates to the Crude Tankers Lightering business and reflects incremental spot chartered-in Aframax days for full-service jobs and an increased rate on two of the workboats being chartered-in. Depreciation and amortization increased by $4.1 million to $81.0 million in 2024 from $76.9 million in 2023 principally as a result of $3.0 million relating to the commencement of depreciation on the Company’s three dual-fuel LNG VLCC newbuilds.

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Excluding depreciation and amortization and general and administrative expenses, operating income for the Crude Tankers Lightering business was $24.4 million for 2024 compared to $23.3 million for 2023. The increase reflects increased activity levels year-over-year, with 459 service support only lighterings and six full-service lighterings being performed during 2024 compared to the 438 service support only lighterings and two full-service lightering that were performed during 2023.

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Product Carriers

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The following table provides a breakdown of TCE rates achieved for the years ended December 31, 2024 and 2023 between spot and fixed earnings and the related revenue days. The information is based, in part, on information provided by the commercial pools in which the segment’s vessels participate and excludes commercial pool fees/commissions averaging approximately $850 and $797 per day in 2024 and 2023, respectively, as well as revenue and revenue days for which recoveries were recorded by the Company under its loss of hire insurance policies. The fixed earnings rates in the table are net of broker/address commissions.

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During 2024, TCE revenues for the Product Carriers segment decreased by $47.3 million, or 9%, to $496.0 million from $543.3 million in 2023. The reduction in TCE revenues was primarily as a result of (i) a $31.6 million days-based decrease in the LR1 fleet sector which reflects the impacts of a 419-day net decrease in time chartered-in days and 129 more off-hire days in the current year, (ii) a $24.8 million rates-based decrease in the LR1 sector due to lower average daily rates earned in the current year, (iii) a $1.6 million days-based decrease in the LR2 fleet due to 57 more off-hire days in the current year, and (iv) a $1.0 million days-based decrease in the MR sector, which reflects an increase of 179 off-hire days in the current year, significantly offset by 139 more owned vessel days in the current year. The increase in owned vessel days reflects the Company’s acquisition of six MRs between April 2024

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and May 2024, partially offset by the sales of six MRs between March 2023 and July 2024. Partially offsetting the TCE decreases described above was a $11.9 million aggregate rates-based increase in the MR and LR2 sectors due to higher average blended rates in the current year.

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Vessel expenses during 2024 increased by $1.7 million to $145.6 million from $143.8 million in 2023. Such increase principally reflects higher LR1 drydock deviation costs, partially offset by a decrease in spares and repair costs in the MR fleet. Charter hire expenses decreased by $12.0 million to $15.5 million in 2024 from $27.5 million in 2023 primarily as a result of the year-over-year decrease in time chartered-in LR1 days described above. Depreciation and amortization increased by $16.3 million to $68.5 million in the current year from $52.2 million in the prior year. Such increase resulted from increased drydock amortization and the MR purchases and sales referenced above, as the acquired vessels have higher cost bases than the older vessels that were sold.

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General and Administrative Expenses

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During 2024, general and administrative expenses increased by $5.1 million to $52.6 million from $47.5 million in 2023. The primary drivers were comprised of (i) increased compensation and benefits costs of $1.8 million, $0.5 million of which relates to non-cash stock compensation, and an additional $0.5 million of which relates to the termination of a legacy retiree medical benefits plan, (ii) higher legal fees of $1.4 million, which were principally incurred in connection with a commercial dispute, (iii) $0.6 million of incremental IT spend, and (iv) increased travel and entertainment expense of $0.4 million. See Note 19, “Contingencies”, to the accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information relating to the commercial dispute referenced above.

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Other Operating Expenses

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See Note 17, “Other Operating Expenses,” to the accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information on these expenses.

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Other Income

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Other income was $10.1 million for the year ended December 31, 2024 compared with $10.7 million for the year ended December 31, 2023. The current year includes $9.9 million of interest income compared to interest income of $13.9 million earned during 2023.The year-over-year decrease reflects the impact of a lower average balance of invested cash during 2024, attributable to the significant deleveraging initiatives completed during 2023, as well as a decrease in interest rates in anticipation of the Federal Reserve’s move to cut rates in the second half of 2024. The interest income in 2023 was partially offset by a $1.3 million loss on extinguishment of debt and a $2.7 million write-off of unamortized deferred financing costs. See Note 9, “Debt,” to the accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for further information. The 2024 and 2023 periods also reflect net actuarial gains and currency gains or losses associated with the Company’s retirement benefit obligation in the United Kingdom. See Note 18, “Other Income,” to the accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for further information.

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Interest Expense

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The components of interest expense are as follows:

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Interest expense decreased in 2024 compared to 2023 as a result of (i) a reduction in the average outstanding principal balance under the $750 Million Term Loan Facility (which was amended and extended in April 2024), (ii) the repayment in full of the COSCO Lease financing in July 2023 and (iii) the repayment in full of the ING Credit Facility in April 2024, partially offset by post-delivery

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interest expense related to the BoComm Lease Financing. See Note 9, “Debt,” to the accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for further information on the Company’s debt facilities.

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Income Tax Benefit/(Provision)

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We qualified for an exemption pursuant to Section 883, or the “Section 883 exemption,” of the U.S. Internal Revenue Code of 1986, as amended, or the “Code,” for the tax year ended December 31, 2024. We will qualify for the Section 883 exemption for 2025 and forward if, among other things, (i) our common shares are treated as primarily and regularly traded on an established securities market in the United States or another qualified country (“publicly traded test”), or (ii) we satisfy one of two other ownership tests. Under applicable U.S. Treasury Regulations, the publicly traded test will not be satisfied in any taxable year in which persons who directly, indirectly or constructively own five percent or more of our common shares (sometimes referred to as “5% shareholders”) own in the aggregate 50% or more of the vote and value of our common shares for more than half the days in such year, unless an exception applies. We can provide no assurance that ownership of our common shares by 5% shareholders will allow us to qualify for the Section 883 exemption in future taxable years. If we do not qualify for the Section 883 exemption, our gross shipping income derived from U.S. sources, i.e., 50% of our gross shipping income attributable to transportation beginning or ending in the United States (but not both beginning and ending in the United States), generally would be subject to a U.S. federal income tax of four percent without allowance for deductions.

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The Company reviews its freight tax obligations on a regular basis and may update its assessment of its tax positions based on available information at that time. Such information may include additional legal advice as to the applicability of freight taxes in relevant jurisdictions. Freight tax regulations are subject to change and interpretation; therefore, the amounts recorded by the Company may change accordingly. During 2024 the Company decreased its reserve for uncertain tax liabilities for various jurisdictions by $1.1 million compared to a $3.6 million increase in such reserves during 2023.

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See Note 11, “Taxes,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data,” for further details on the income tax benefit/(provision) line.

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EBITDA and Adjusted EBITDA

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EBITDA represents net income before interest expense, income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that we do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA are presented to provide investors with meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative periods. EBITDA and Adjusted EBITDA do not represent, and should not be considered a substitute for, net income or cash flows from operations determined in accordance with GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results reported under GAAP. Some of the limitations are:

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While EBITDA and Adjusted EBITDA are frequently used by companies as a measure of operating results and performance, neither of those items as prepared by the Company is necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation.

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The following table reconciles net income, as reflected in the consolidated statements of operations set forth in Item 8, “Financial Statements and Supplementary Data,” to EBITDA and Adjusted EBITDA:

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LIQUIDITY AND SOURCES OF CAPITAL

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Our business is capital intensive. Our ability to successfully implement our strategy is dependent on the continued availability of capital on attractive terms. In addition, our ability to successfully operate our business to meet near-term and long-term debt repayment obligations is dependent on maintaining sufficient liquidity.

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Liquidity

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As of December 31, 2024, we had total liquidity on a consolidated basis of $632.2 million comprised of $157.5 million of cash and $474.7 million of undrawn revolver capacity.

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Working capital at December 31, 2024 and 2023 was $245.4 million and $269.5 million, respectively. Current assets are highly liquid, consisting principally of cash, interest-bearing deposits, short-term investments, which are time deposits with original maturities of between 91 and 180 days, and receivables. Current liabilities include current installments of long-term debt of $50.1 million and $127.4 million at December 31, 2024 and 2023, respectively.

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The Company’s total cash increased by $30.7 million during the year ended December 31, 2024. This increase principally reflects:

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Such cash inflows were partially offset by:

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Our cash and cash equivalents balances generally exceed Federal Deposit Insurance Corporation insured limits. We place our cash and cash equivalents in what we believe to be credit-worthy financial institutions. In addition, certain of our money market accounts invest in U.S. Treasury securities or other obligations issued or guaranteed by the U.S. government or its agencies, floating rate and variable demand notes of U.S. and foreign corporations, commercial paper rated in the highest category by Moody’s Investor Services and Standard & Poor’s, certificates of deposit and time deposits, asset-backed securities, and repurchase agreements.

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As of December 31, 2024, we had total debt outstanding (net of original issue discount and deferred financing costs) of $688.4 million and a net debt to total capitalization of 22.2%, which compares with 23.8% at December 31, 2023.

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Sources, Uses and Management of Capital

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During 2024, we have (i) used incremental liquidity generated from operations and the proceeds from disposal of older tonnage at strong prices to invest in renewing and growing the fleet, (ii) enhanced our balance sheet and liquidity position, and (iii) continued to make substantial returns to shareholders.

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In addition to future operating cash flows, our other future sources of funds are proceeds from issuances of equity securities, additional borrowings as permitted under our loan agreements and proceeds from the opportunistic sales of our vessels. Our current uses of funds are to fund working capital requirements, maintain the quality of our vessels, purchase vessels, pay newbuilding construction costs, comply with international shipping standards and environmental laws and regulations, repay or repurchase our outstanding loan facilities, pay a regular quarterly cash dividend, and from time-to-time, repurchase shares of our common stock and pay supplemental cash dividends.

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The following is a summary of the significant capital allocation initiatives we executed during 2024 and the sources of capital we have at our disposal for future use as well as our current commitments for future uses of capital:

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During 2024, the Company’s Board of Directors declared and paid regular quarterly and supplemental cash dividends totaling $284.4 million or $5.77 per share as follows:

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Also on February 26, 2025, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share of common stock and a supplemental dividend of $0.58 per share of common stock. Both dividends will be paid on March 28, 2025 to stockholders of record as of March 14, 2025.

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During 2024, the Company repurchased and retired 501,646 shares of its common stock in open-market purchases, at an average price of $49.81 per share, for a total cost of $25.0 million. In November 2024, the Company’s Board of Directors authorized an increase in the share repurchase program to $50.0 million from $25.0 million. The expiry date of the stock repurchase program is on December 31, 2025.

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In continuation of our strategic fleet optimization program during 2024, we:

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Further building on our liquidity enhancing, deleveraging and financing diversification initiatives, we executed the following transactions:

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By entering into the $500 Million Revolving Credit Facility we have (i) eliminated $19.5 million in mandatory quarterly debt repayments since the balance drawn on closing is not required to be repaid until Maturity, (ii) reduced cash break evens by over $3,000 per day, (iii) extended the maturity profile of the facility from 2027 to 2030, and (iv) reduced future interest expense through a margin reduction of over 85 basis points.

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As of December 31, 2024, the Company has contractual commitments for the construction of six dual-fuel ready LR1s, and the purchase and installation of one ballast water treatment system and five mewis ducts, the final outstanding installment payments due for four ballast water treatment systems that were installed prior to December 31, 2024, and the purchase and installation of various performance efficiency devices for the fleet. The Company’s debt service commitments and aggregate purchase commitments for vessel construction and betterments as of December 31, 2024, are presented in the Aggregate Contractual Obligations Table below.

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Outlook

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Our strong balance sheet, as evidenced by a substantial level of liquidity, 35 unencumbered vessels (excluding the six LR1s under construction) as of December 31, 2024, and diversified financing sources with debt maturities spread out between 2030 and 2031, positions us to support our operations over the next twelve months as we continue to advance our vessel employment strategy, which seeks to achieve an optimal mix of spot (voyage charter) and long-term (time charter) charters. Our balance sheet strength and balanced fleet position us to continue pursuing our disciplined capital allocation strategy of fleet renewal, incremental debt reduction and returns to shareholders and pursue potential strategic opportunities that may arise within the diverse sectors in which we operate.

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Aggregate Contractual Obligations

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A summary of the Company’s long-term contractual obligations as of December 31, 2024 follows:

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Carrying Value of Vessels

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At December 31, 2024, 41 of the Company’s 76 owned and bareboat chartered-in vessels were pledged as collateral under certain of the Company’s debt and lease financing facilities. The following table presents information with respect to the carrying amount of the Company’s vessels by type. Instances in which the fair market values of the Company’s vessels, which are estimated by a third-party vessel appraiser, are below their carrying values as of December 31, 2024, are indicated in the footnote(s) to the table. The carrying value of each of the Company’s vessels does not necessarily represent its fair market value or the amount that could be obtained if the vessel were sold. The Company’s estimates of market values for its vessels assume that the vessels are all in good and seaworthy condition without need for repair and, if inspected, would be certified as being in class without notations. In addition, because vessel values are highly volatile, these estimates may not be indicative of either the current or future prices that the Company could achieve if it were to sell any of the vessels. The Company would not record a loss for any of the vessels for which the fair market value is below its carrying value unless and until the Company either determines to sell the vessel for a loss or determines that the vessel is impaired as discussed below in “Critical Accounting Policies — Vessel Impairment.” The Company believes that the future undiscounted cash flows expected to be earned over the estimated remaining useful lives for those vessels that have experienced declines in market values below their carrying values would exceed such vessels’ carrying values.

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Footnotes to the following table exclude those vessels with an estimated market value in excess of their carrying value.

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RISK MANAGEMENT

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Interest rate risk

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The Company is exposed to market risk from changes in interest rates, which could impact its results of operations and financial condition. The Company manages this exposure to market risk through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. To manage its interest rate risk exposure associated with changes in variable interest rate payments due on its credit facilities in a cost-effective manner, the Company, from time-to-time, enters into interest rate swap, collar or cap agreements, in which it agrees to exchange various combinations of fixed and variable interest rates based on agreed upon notional amounts or to receive payments if floating interest rates rise above a specified cap rate. The Company uses such derivative financial instruments as risk management tools and not for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage exposure to nonperformance on such instruments by the counterparties.

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See “Interest Rate Sensitivity” section below and Note 8, “Fair Value of Financial Instruments, Derivative and Fair Value Disclosures,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information on the Company various interest rate derivatives.

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Currency and exchange rate risk

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The shipping industry’s functional currency is the U.S. dollar. All of the Company’s revenues and most of its operating costs are in U.S. dollars. The Company incurs certain operating expenses, such as some vessel and general and administrative expenses, in currencies other than the U.S. Dollar, and the foreign exchange risk associated with these operating expenses is immaterial. If foreign exchange risk becomes material in the future, the Company may seek to reduce its exposure to fluctuations in foreign exchange rates through the use of short-term currency forward contracts and through the purchase of bulk quantities of currencies at rates that management considers favorable. For contracts which qualify as cash flow hedges for accounting purposes, hedge effectiveness would be assessed based on changes in foreign exchange spot rates with the change in fair value of the effective portions being recorded in accumulated other comprehensive income/(loss).

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Fuel price volatility risk

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The Company has installed scrubbers on ten VLCCs and two of its Suezmaxes. During 2024, the average price differential between very low sulfur fuel and high sulfur fuel in Singapore and Fujairah, the most common bunkering locations for VLCCs, was approximately $130 per ton. Assuming a VLCC bunker consumption rate of 50 metric tons per day, this translated to approximately $6,500 per day per vessel in lower bunker consumption costs on our VLCCs during 2024. In addition to installing scrubbers on certain of the larger vessels in the Company’s fleet, significant consideration continues to be given to other ways of managing the risk of volatility in the price spread between high-sulfur fuel and low-sulfur fuel as well as the risk of limited supply of compliant fuel or HFO along the routes that the Company’s vessels typically travel.

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Interest Rate Sensitivity

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As of December 31, 2024, the Company had lease financings and revolving credit facilities under which borrowings bear interest at a rate based on SOFR, plus the applicable margin, as stated in the respective financing arrangements. The Company has entered into interest rate swaps agreements with major financial institutions covering for accounting purposes 100% of the $500 Million Revolving Credit Facility outstanding balance of $144.6 million as of December 31, 2024, and $83.6 million of the notional principal amount outstanding under the Ocean Yield Lease Financing that effectively converts the Company’s interest rate exposure from a three-month SOFR floating rate to a fixed rate of 2.84% through the maturity date of February 22, 2027.

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The following table presents information about the Company’s financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents the principal cash flows and related weighted average interest rates by expected maturity dates of the Company’s debt obligations.

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Principal (Notional) Amount (dollars in millions) by Expected Maturity and Average Interest (Swap) Rate

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CRITICAL ACCOUNTING ESTIMATES AND POLICIES

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The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Company to make estimates in the application of its accounting policies based on the best assumptions, judgments, and opinions of management. Following is a discussion of the accounting policies that involve a higher degree of judgment and the methods of their application. For a description of all of the Company’s material accounting policies, see Note 2, “Summary of Significant Accounting Policies,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data.”

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Vessel Lives and Salvage Values

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The carrying value of each of the Company’s vessels represents its original cost at the time it was delivered or purchased less depreciation calculated using an estimated useful life of 25 years from the date such vessel was originally delivered from the shipyard. A vessel’s carrying value is reduced to its new cost basis (i.e., its current fair value) if a vessel impairment charge is recorded.

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If the estimated useful lives assigned to the Company’s vessels prove to be shorter than previously estimated because of new regulations, an extended period of weak markets, the broad imposition of age restrictions by the Company’s customers, or other future events, it could result in higher depreciation expense and impairment losses in future periods related to a reduction in the useful lives of any affected vessels.

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Company management estimates the steel recycle value of all of its vessels to be $300 per lightweight ton consistent with its commitment to implement and practice environmentally and socially responsible ship recycling. The Company’s assumptions used in the determination of estimated salvage value take into account current steel recycling prices, the historic pattern of annual average steel recycling rates over the five years ended December 31, 2024, which ranged from $270 to $670 per lightweight ton, estimated changes in future market demand for recycled steel and estimated future demand for vessels. Steel recycling prices also fluctuate depending upon type of ship, bunkers on board, spares on board and delivery range. Market conditions that could influence the volume and pricing of vessel recycling activity in 2025 and beyond include (i) the combined impact of scheduled newbuild deliveries and charter rate expectations for vessels potentially facing age restrictions imposed by oil majors, (ii) the impact of ballast water treatment systems regulatory requirements or proposals, (iii) costs and timing of pending special surveys, which are likely to be expensive for vessels over 15 years of age, and (iv) IMO requirements for the use of low-sulfur fuels and other carbon reduction initiatives. These factors will influence owners’ decisions to accelerate the disposal of older vessels, especially those with upcoming special surveys.

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Although management believes that the assumptions used to determine the steel recycling value for its vessels are reasonable and appropriate, such assumptions are highly subjective, in part, because of the cyclicality of the nature of future demand for recycled steel.

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Vessel Impairment

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The carrying values of the Company’s vessels may not represent their fair market value or the amount that could be obtained by selling the vessel at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. Historically, both charter rates and vessel values tend to be cyclical. Management evaluates the carrying amounts of vessels held and used by the Company for impairment only when it determines that it will sell a vessel or when events or changes in circumstances occur that cause management to believe that future cash flows for any individual vessel will be less than its carrying value. In such instances, an impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the vessel and its eventual disposition is less than the vessel’s carrying amount. This assessment is made at the individual vessel level as separately identifiable cash flow information for each vessel is available.

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In developing estimates of future cash flows, the Company must make assumptions about future performance, with significant assumptions being related to charter rates, operating expenses, utilization, drydocking and capital expenditure requirements, residual value and the estimated remaining useful lives of the vessels. These assumptions are based on historical trends as well as future expectations. Specifically, in estimating future charter rates, management takes into consideration rates currently in effect for existing time charters and estimated daily time charter equivalent rates for each vessel class for the unfixed days over the estimated remaining lives of each of the vessels. The estimated daily time charter equivalent rates used for unfixed days are based on a combination of (i) rates as forecasted by third-party analysts, and (ii) trailing historical average rates, based on monthly average rates published by a third-party maritime research service. Management determines the historical periods to utilize in its estimations based on its judgment of current, past, and ongoing shipping cycles. Recognizing that the transportation of crude oil and petroleum products is cyclical and subject to significant volatility based on factors beyond the Company’s control, management believes the use of estimates based on the combination of rates forecasted by third-party analysts and historical average rates calculated as of the reporting date to be reasonable.

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Estimated outflows for operating expenses and capital expenditures and drydocking requirements are based on historical and budgeted costs and are adjusted for assumed inflation. Utilization is based on historical levels achieved and estimates of residual value for recycling are based upon the pattern of steel recycling rates used in management’s evaluation of salvage value for purposes of recording depreciation. Finally, for vessels that are being considered for disposal before the end of their respective useful lives, the Company utilizes weighted probabilities assigned to the possible outcomes for such vessels being sold or recycled before the end of their respective useful lives.

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The determination of fair value is highly judgmental. In estimating the fair value of INSW’s vessels for purposes of Step 2 of the impairment tests, the Company considers the market and income approaches by using a combination of third-party appraisals and discounted cash flow models prepared by the Company. In preparing the discounted cash flow models, the Company uses a methodology consistent with the methodology discussed above in relation to the undiscounted cash flow models prepared by the Company and discounts the cash flows using its current estimate of INSW’s weighted average cost of capital.

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The more significant factors that could impact management’s assumptions regarding time charter equivalent rates include (i) loss or reduction in business from significant customers, (ii) unanticipated changes in demand for transportation of crude oil and petroleum products, (iii) changes in production of or demand for oil and petroleum products, generally or in particular regions, (iv) greater than anticipated levels of tanker newbuilding orders or lower than anticipated levels of tanker recycling, and (v) changes in rules and regulations applicable to the tanker industry, including legislation adopted by international organizations such as IMO and the EU or by individual countries. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate at the time they were made, such assumptions are highly subjective and likely to change, possibly materially, in the future.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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INTRODUCTION

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This MD&A, which should be read in conjunction with our accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” provides a discussion and analysis of our business, current developments, financial condition, cash flows and results of operations. It is organized as follows:

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A detailed discussion of the 2022 to 2021 year-over-year changes is not included herein and can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 filed on February 28, 2023.

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GENERAL

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We are a provider of ocean transportation services for crude oil and refined petroleum products. We operate our vessels in the International Flag market. Our business includes two reportable segments: Crude Tankers and Product Carriers. For the years ended December 31, 2023 and 2022 we derived 51% and 62%, respectively, of our TCE revenues from our Product Carriers segment. Revenues from our Crude Tankers segment constituted the balance of our TCE revenues during these periods.

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As of December 31, 2023, the Company’s operating fleet consisted of 73 wholly-owned or lease financed and time chartered-in vessels aggregating 8.8 million deadweight tons (“dwt”). In addition to our operating fleet of 73 vessels, four LR1 newbuilds are scheduled for delivery to the Company between the second half of 2025 and first quarter of 2026, bringing the total operating and newbuild fleet to 77 vessels. Our fleet includes VLCC, Suezmax and Aframax crude tankers and LR2, LR1 and MR product carriers.

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The Company’s revenues are highly sensitive to patterns of supply and demand for vessels of the size and design configurations owned and operated by the Company and the trades in which those vessels operate. Rates for the transportation of crude oil and refined petroleum products from which the Company earns a substantial majority of its revenues are determined by market forces such as the supply and demand for oil, the distance that cargoes must be transported, and the number of vessels expected to be available at the time such cargoes need to be transported. The demand for oil shipments is significantly affected by the state of the global economy, levels of U.S. domestic and international production and OPEC exports. The number of vessels is affected by newbuilding deliveries and by the removal of existing vessels from service, principally through storage, recycling or conversions. The Company’s revenues are also affected by its vessel employment strategy, which seeks to achieve the optimal mix of spot (voyage charter) and long-term (time or bareboat charter) charters. Because shipping revenues and voyage expenses are significantly affected by the mix

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between voyage charters and time charters, the Company measures the performance of its fleet of vessels based on TCE revenues. Management makes economic decisions based on anticipated TCE rates and evaluates financial performance based on TCE rates achieved. In order to take advantage of market conditions and optimize economic performance, management employs all of the Company’s LR1 product carriers, which currently participate in the Panamax International pool, in the transportation of crude oil cargoes.

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Our revenues are derived predominantly from spot market voyage charters and our vessels are predominantly employed in the spot market via market-leading commercial pools. We derived approximately 91% and 96% of our total TCE revenues in the spot market for the years ended December 31, 2023 and 2022, respectively. The future minimum revenues, before reduction for brokerage commissions, expected to be received on non-cancelable time charters for three VLCCs, two Suezmaxes, one Aframax, and six MRs as of December 31, 2023 are as follows:

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Russian-Ukraine Conflict

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The ongoing military conflict in Ukraine has had a significant direct and indirect impact on the trade of crude oil and refined petroleum products. This conflict has resulted in the United States, United Kingdom, and the European Union, among other countries, implementing sanctions and executive orders against citizens, entities, and activities connected to Russia. Some of these sanctions and executive orders target the Russian oil sector, including a prohibition on the import of oil from Russia to the United States or the

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United Kingdom, and the European Union's ban on Russian crude oil and petroleum products which took effect in December 2022 and February 2023, respectively.

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Russia’s invasion of Ukraine also led to a disruption in supply chains for crude oil and refined petroleum products, changing volumes and trade routes, thus increasing ton-mile demand for the seaborne transportation of both crude oil and refined petroleum products, which resulted in a prolonged spike in freight rates. Self-sanctioning by Western oil majors and many ship owners resulted in disrupted product flows, primarily diesel, from Russia to Europe, while high arbitrage spreads incentivized Middle Eastern and U.S. diesel flows to Europe, increasing ton-mile demand for vessels.

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The U.S., EU nations and other countries could impose wider sanctions and take other actions. Further sanctions imposed or actions taken by the U.S., EU nations or other countries, and retaliatory measures by Russia in response, could lead to increased volatility in global oil demand, which could have a material impact on our business, results of operations and financial condition. In addition, it is possible that third parties with which we do business may be impacted by events in Russia and Ukraine, which could adversely affect us. See Item 1A, Risk Factors – Terrorist attacks and international hostilities and instability can affect the tanker industry, which could adversely affect INSW’s business.

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Red Sea Attacks

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The ongoing military conflict between Israel and Hamas has had a direct and indirect impact on the trade of crude oil and refined petroleum products. Heightened security risks because of attacks on merchant vessels transiting through the Red Sea to or from the Suez Canal has led to an increase in ton-mile demand for vessels as more vessel owners are opting to re-route their vessels around the Cape of Good Hope. See Item 1A, Risk Factors – Terrorist attacks and international hostilities and instability can affect the tanker industry, which could adversely affect INSW’s business.

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OPERATIONS AND OIL TANKER MARKETS

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The International Energy Agency (“IEA”) estimates global oil consumption for the fourth quarter of 2023 at 102.0 million barrels per day (“b/d”), up 1.8% from the same quarter in 2022. The estimate for global oil consumption for 2024 is 103.0 million b/d, an increase of 1.3% over the 2023 estimate of 101.7 million b/d. OECD demand in 2024 is estimated to decrease by 0.2% to 45.6 million b/d, while non-OECD demand is estimated to increase by 2.5% to 57.4 million b/d.

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Global oil production in the fourth quarter of 2023 was 102.2 million b/d, the same level as the fourth quarter of 2022. OPEC crude oil production averaged 26.7 million b/d in the fourth quarter of 2023, a decrease of 0.3 million b/d from the third quarter of 2023, and a decrease of 2.4 million b/d from the fourth quarter of 2022. Non-OPEC production increased by 2.3 million b/d to 70.0 million b/d in the fourth quarter of 2023 compared with the fourth quarter of 2022. Oil production in the U.S. in the fourth quarter of 2023 increased by 2.5% to 13.3 million b/d compared to the third quarter of 2023 and by 7.0% from the fourth quarter of 2022.

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U.S. refinery throughput decreased by 1.3 million b/d to 15.8 million b/d in the fourth quarter of 2023 compared with the third quarter of 2023. U.S. crude oil imports in the fourth quarter of 2023 decreased by 0.1 million b/d to 6.1 million b/d compared with the fourth quarter of 2022, with imports from OPEC countries remaining flat and imports from non-OPEC countries decreasing by 0.1 million b/d.

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China’s crude oil imports in 2023 set a new record of 11.3 million b/d; the previous record year was 2020 with 10.8 million b/d. Crude imports in December averaged 11.4 million b/d, up from November’s imports of 10.3 million b/d.

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Total commercial inventories ended the fourth quarter of 2023 essentially flat compared with the fourth quarter of 2022; however stocks during the fourth quarter of 2023 declined by approximately 64.0 million barrels from the end of the prior quarter while stocks during the fourth quarter of 2022 increased by approximately 21.0 million barrels.

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During the fourth quarter of 2023, the tanker fleet of vessels over 10,000 dwt increased, net of vessels recycled, by 1.2 million dwt as the crude fleet increased by 0.8million dwt, with VLCCs and Aframaxes growing by 0.6 million dwt and 0.4 million dwt, respectively, and Suezmaxes decreasing by 0.2 million dwt. The product carrier fleet increased by 0.4 million dwt, with MRs growing 0.4 million dwt. Year-over-year, the size of the tanker fleet increased by 13.1 million dwt with the VLCCs, Suezmaxes, Aframaxes, and MRs

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increasing by 6.1 million dwt, 0.9 million dwt, 4.0 million dwt, and 2.2 million dwt, respectively. The LR1/Panamax fleet remained unchanged.

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The tanker orderbook remains at historic lows across all tanker sectors and the average age of the global fleet is approximately 13 years. During the fourth quarter of 2023, the tanker orderbook increased by 3.4 million dwt overall compared with the third quarter of 2023. The crude tanker orderbook increased by 2.6 million dwt. The VLCC orderbook remained flat, while the Suezmax and Aframax orderbooks increased by 1.4 million dwt and 1.2 million dwt respectively. The product carrier orderbook increased by 0.8 million dwt, with increases in the LR1 and MR sectors of 0.6 million dwt and 0.2 million dwt respectively. Year-over-year, the total tanker orderbook increased by 17.8 million dwt, with VLCC decreasing by 1.1 million dwt and increases in Suezmaxes, Aframaxes, Panamaxes and LR1s of 7.2 million dwt, 5.7 million dwt, 2.2 million dwt and 3.7 million dwt, respectively.

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Crude tanker rates recovered during the fourth quarter of 2023 from the relatively lower rates in the third quarter of 2023, remaining significantly over 10-year average rates and cash breakeven levels, reflecting the continuing impact of the disruptions in trade flows on tanker demand. Clean product tanker rates remained strong during the quarter. The strength in rates across the board continued into the first quarter of 2024.

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RESULTS FROM VESSEL OPERATIONS

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During 2023, income from vessel operations increased by $172.8 million to $615.4 million from $442.7 million in 2022. Such increase resulted principally from a year-over-year increase in TCE revenues and larger gains on the sale of vessels recognized in the current year, partially offset by increased depreciation and amortization, vessel expenses, and charter hire expenses in the current year.

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The increase in TCE revenues in 2023 of $201.8 million, or 24%, to $1,055.5 million from $853.7 million in 2022 primarily reflects (i) a net aggregate $191.9 million rates-based increase resulting from higher average daily rates earned across all of INSW’s fleet sectors, with the exception of the MRs, and (ii) a $10.5 million increase attributable to the Company’s Lightering business.

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The following tables provide a quarterly trend analysis of spot TCE rates earned between the fourth quarter of 2022 and 2023 by our Crude Tankers and Product Carriers fleet. See the “Operations and Oil Tanker Markets” discussion above for a description of the market factors that impacted the quarterly trend of spot rates during 2023.

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See Note 5, “Business and Segment Reporting,” to the Company’s consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information on the Company’s segments, including equity in income of affiliated companies and reconciliations of (i) time charter equivalent revenues to shipping revenues and (ii) adjusted income/(loss) from vessel operations for the segments to income/(loss) before income taxes, as reported in the consolidated statements of operations.

Crude Tankers

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