OSG Reports Record Quarter

Overseas Shipholding Group, Inc. reported net income for the quarter ended March 31, 2004 of $76,188,000, or $1.99 per share, an increase of 72% compared with net income of $44,235,000, or $1.28 per share, in the first quarter of 2003. EBITDA for the first quarter rose to $156,413,000 compared with $94,216,000 in the first quarter of 2003.

"I am pleased to announce that OSG has been able to follow a record year in 2003 with record net income of $76 million in the first quarter of 2004, the highest quarterly income in the company's history," said Morten Arntzen, President and Chief Executive Officer of OSG. "Strong charter rates for VLCCs and Aframaxes, which commenced in October 2003, prevailed throughout the first quarter and have continued into the second quarter. We have already fixed approximately 56% of VLCC open days and 52% of Aframax open days in the second quarter.

"Expanding in our areas of strategic focus, we have acquired two U.S. Flag Jones Act Product Carriers and agreed to acquire, in a joint venture with a Tankers International pool partner, four ULCCs. By acquiring these four modern ULCCs and integrating them into the pool, we can offer our customers a service not available from others. "Following a successful $115 million equity offering in January, a 20-year $150 million unsecured debt offering in February, and record earnings for the quarter, the company ended the quarter with liquidity of almost $1.0 billion and equity of $1.1 billion. Our financial strength, modern fleet and first class reputation creates a powerful platform for further expansion."

Operations

In January, OSG took delivery of the Overseas Cathy, a 112,000 dwt Aframax, completing the Company's recent fleet modernization program.

In March, the Overseas Chris became OSG's first vessel to receive its International Ship Security Certificate and the Overseas Marilyn recently became the Company's first U.S. Flag vessel to receive this certification. Under the International Code for the Security of Ships and of Port Facilities ("ISPS") all vessels worldwide must receive this certificate by July 1, 2004.

During the first quarter OSG entered into eight time charters in: taking a 40% interest in two newbuilding VLCCs for five years, a 15% interest in a 2000-built VLCC for five years, a 50% interest in two 1998-built Aframaxes for five years, a 30% interest in a 2003-built VLCC for two years, and a 50% interest in two VLCCs (built in 1995 and 1996) for three years.

In March, a new member joined the Aframax International pool, contributing two modern Aframaxes, bringing the total number of vessels in the pool to 34, including newbuildings. In April, the Company acquired two U.S. Flag Jones Act Product Carriers. The two vessels, built in 1982 and 1983, are currently operating on bareboat charters to an oil major.

In April, the Company announced that it had formed a joint venture to acquire four 442,000 dwt Ultra Large Crude Carriers, three built in 2002 and one in 2003. OSG will have a 49.9% interest in this joint venture.

VLCC Sector

During the first quarter of 2004, rates for modern VLCCs trading out of the Arabian Gulf averaged $75,200 per day, even higher than the $68,000 per day achieved in the first quarter of 2003. Demand for VLCC tonnage remained strong, as China extended its position as the second largest consumer of crude oil after the U.S., increasing demand to 6.1 mbd in the quarter. The vast majority of crude oil imports into China are carried by VLCCs on long haul routes. While an extremely cold winter in the U.S. contributed to this sector's strength, growth in demand for VLCC tonnage in the quarter was largely driven by demand for crude oil in Asia, particularly China and India. The world VLCC fleet increased during the first quarter of 2004 from 433 vessels of 126.1 million dwt to 435 vessels of 126.3 million dwt as newbuilding deliveries marginally exceeded scrapping and sales for conversion. With 15 VLCCs ordered during the quarter, the world orderbook stood at 83 vessels at the end of the quarter, representing 19.9% of the existing VLCC fleet.

The EIA predicts long term world oil demand will grow at a 2.0% rate with much of the incremental supply sourced from the Middle East. With the world's largest oil consumers on long haul routes from the Middle East, the resulting increase in ton-mile demand is likely to moderate the effect of the growing VLCC orderbook, with positive implications for rates.

Aframax Sector

Rates for Aframaxes operating in the Caribbean trades during the first quarter of 2004 averaged $46,800 per day, compared with $41,200 per day in the first quarter of 2003. FSU oil production continued to grow, reaching 10.8 mbd in the first quarter of 2004, a 9.6% increase over the first quarter of 2003. Seaborne exports, however, climbed by 23.8% when comparing the same periods. This dramatic rise, coupled with the systemic delays in transiting the Bosporus in wintertime, was very positive for Aframaxes, which carry a substantial portion of this trade. The increased demand for Aframaxes to carry FSU exports reduced availability of tonnage in adjacent regions, positively impacting rates in the Caribbean and North Sea. The world Aframax fleet increased during the quarter to 614 vessels of 60.8 million dwt from 601 vessels of 59.2 million dwt as newbuilding deliveries substantially exceeded scrapping and other removals from the fleet. The world Aframax orderbook, which decreased marginally during the quarter, stood at 153 vessels or 16.6 million dwt at the end of the quarter, representing 27.2% of the existing fleet. The FSU's growing share of world oil production, which now stands at 13.2%, provides support for Aframax demand in the Atlantic Basin and Mediterranean Sea. The EU restrictions on single hull tankers and the accelerated IMO phase out of single hull tankers will further moderate the effect of this orderbook on rates, providing a positive outlook for this sector.

Overseas Shipholding Group, Inc. Quarter Ended March 31,

2004 2003

VLCC

Average TCE Rate $74,280 $52,968

Number of Revenue Days 1,466 1,050

AFRAMAX

Average TCE rate 36,464 33,140

Number of Revenue days 1,142 958

PRODUCT CARRIER

Average TCE Rate 19,408 15,929

Number of Revenue Days 483 679