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UNITED STATES SECURITIES AND EXCHANGE
COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

|           |                                                                                                                                               
|---------- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(Mark One) |                                                                                                                                               
|           |                                                                                                                                               
|þ          | Quarterly Report Pursuant to
  Section 13 or 15(d) of the Securities Exchange Act of 
  1934 for the Quarter Ended September 30, 2006         
|           |                                                                                                                                               
|           | OR                                                                                                                                            
|           |                                                                                                                                               
|o          | Transition Report Pursuant to
  Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
  Transition Period from _______ to _______

Commission
File Number: 001-14135

OMI CORPORATION(Exact name of registrant as specified in its charter)

[OMI LOGO]

|                                                                    |  |                                        
|------------------------------------------------------------------- |  | ---------------------------------------
|Marshall
  Islands                                                  |  | 52-2098714                             
|                                                                    |  |                                        
|(State or other
  jurisdiction of 
  incorporation or organization) |  | (I.R.S. Employer 
  Identification No.)

One
Station Place
Stamford, CT 06902(Address of principal executive offices, including zip code)

(203)
602-6700(Registrants telephone number, including area code)

Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

þ
Yes oNo

Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated
filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

|                            |                     |                        
|--------------------------- | ------------------- | -----------------------
|Large accelerated filer
  þ | Accelerated filer o | Non-accelerated filer o

Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

o Yes þNo

Indicate
the number of shares outstanding of each of the issuers classes of common
stock, as of the latest practicable date.

|                                |  |                                     
|------------------------------- |  | ------------------------------------
|Class                           |  | Outstanding as of
  November 6, 2006
|                                |  |                                     
|Common Stock, $0.50 par
  value |  | 63,177,201                          

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INDEX TO FORM 10-Q

|                                |                                                                                                                                |                                                                                       |  |    |   
|------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------- |  | -- | --
|                                |                                                                                                                                | Page                                                                                 
|                                |                                                                                                                                |                                                                                      
|PART I: FINANCIAL
  INFORMATION |                                                                                                                                |                                                                                      
|                                |                                                                                                                                |                                                                                       | 
|                                | Item 1.                                                                                                                        | Financial Statements                                                                  |  |    |   
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Condensed Consolidated Statements of Income
  (unaudited) for the three and nine months ended September 30, 2006 and 2005      |                                                                                       |  | 3 
|                                | Condensed Consolidated Balance Sheets
  (unaudited) as of September 30, 2006 and December 31, 2005                             |                                                                                       |  | 4 
|                                | Condensed Consolidated Statement of Changes in
  Stockholders Equity (unaudited) for the nine months ended September 30, 2006 |                                                                                       |  | 5 
|                                | Condensed Consolidated Statements of Cash
  Flows (unaudited) for the nine months ended September 30, 2006 and 2005            |                                                                                       |  | 6 
|                                | Notes to Condensed Consolidated Financial
  Statements (unaudited)                                                             |                                                                                       |  | 7 
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Item 2.                                                                                                                        | Managements
Discussion and Analysis of Financial Condition and
Results of Operations |  |    | 21
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Overview                                                                                                                       |                                                                                       |  | 21
|                                | Market Overview                                                                                                                |                                                                                       |  | 26
|                                | Critical Accounting Estimates                                                                                                  |                                                                                       |  | 30
|                                | Results of Operations                                                                                                          |                                                                                       |  | 30
|                                | Financial Condition and Capital
Resources                                                                                      |                                                                                       |  | 43
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Item 3.                                                                                                                        | Quantitative and Qualitative
  Disclosures about Market Risks                         |  |    | 51
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Item 4.                                                                                                                        | Controls and Procedures                                                               |  |    | 53
|                                |                                                                                                                                |                                                                                       |  |    |   
|PART II: OTHER
  INFORMATION    |                                                                                                                                |                                                                                       | 
|                                |                                                                                                                                |                                                                                       | 
|                                | Item 1.                                                                                                                        | Legal Proceedings                                                                     |  |    | 54
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Item 1A.                                                                                                                       | Risk Factors                                                                          |  |    | 54
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Item 2.                                                                                                                        | Changes in Securities and Use
  of Proceeds                                           |  |    | 54
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Item 3.                                                                                                                        | Defaults upon Senior
  Securities                                                     |  |    | 54
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Item 4.                                                                                                                        | Submission of Matters to a
  Vote of Security Holders                                 |  |    | 55
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Item 5.                                                                                                                        | Other Information                                                                     |  |    | 55
|                                |                                                                                                                                |                                                                                       |  |    |   
|                                | Item 6.                                                                                                                        | Exhibits                                                                              |  |    | 55
|                                |                                                                                                                                |                                                                                       |  |    |   
|SIGNATURES                      |                                                                                                                                |                                                                                       |  |   
|                                |                                                                                                                                |                                                                                       |  |   
|                                |                                                                                                                                |                                                                                       |  |   

2

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PART I:     FINANCIAL
INFORMATION

|        |                     
|------- | --------------------
|Item 1. | Financial Statements

OMI CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|------------------------------------ |  | ----------------------------------------------- | ------- | --------------------------------------------- | - | ------- | - | ---- | ------- | - | - | ------- | -
|                                     |  | FOR THE
  THREE 
  MONTHS ENDED
  SEPTEMBER 30, |         | FOR THE
  NINE
  MONTHS ENDED
  SEPTEMBER 30, |  
|                                     |  | 2006                                            |         | 2005                                          |   | 2006    |   | 2005 |        
|                                     |  |                                                 |         |                                               |   |         |   |      |        
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Revenue                              |  | $                                               | 181,150 |                                               | $ | 143,204 |   | $    | 557,612 |   | $ | 463,120 |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Operating Expenses, Net:             |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Voyage expense                       |  |                                                 | 33,925  |                                               |   | 33,185  |   |      | 108,877 |   |   | 96,263  |  
|Vessel expense                       |  |                                                 | 23,488  |                                               |   | 21,694  |   |      | 67,582  |   |   | 65,481  |  
|Charter hire expense                 |  |                                                 | 44,583  |                                               |   | 15,495  |   |      | 115,274 |   |   | 42,433  |  
|Depreciation and amortization        |  |                                                 | 15,150  |                                               |   | 17,623  |   |      | 46,994  |   |   | 51,222  |  
|General and administrative           |  |                                                 | 8,333   |                                               |   | 7,618   |   |      | 24,635  |   |   | 21,120  |  
|Gain on disposal of vessels          |  |                                                 |        |                                               |   |        |   |      | (78,038 | ) |   | (2,874  | )
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|                                     |  |                                                 | 125,479 |                                               |   | 95,615  |   |      | 285,324 |   |   | 273,645 |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Operating Income                     |  |                                                 | 55,671  |                                               |   | 47,589  |   |      | 272,288 |   |   | 189,475 |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Other (Expense) Income:              |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Interest expense                     |  |                                                 | (9,755  | )                                             |   | (11,043 | ) |      | (32,604 | ) |   | (31,886 | )
|Interest income                      |  |                                                 | 1,702   |                                               |   | 322     |   |      | 3,317   |   |   | 785     |  
|Other                                |  |                                                 | 2,152   |                                               |   | 2,743   |   |      | 2,104   |   |   | 4,154   |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Net Other Expense                    |  |                                                 | (5,901  | )                                             |   | (7,978  | ) |      | (27,183 | ) |   | (26,947 | )
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Net Income                           |  | $                                               | 49,770  |                                               | $ | 39,611  |   | $    | 245,105 |   | $ | 162,528 |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Basic Earnings Per Common Share      |  | $                                               | 0.74    |                                               | $ | 0.49    |   | $    | 3.56    |   | $ | 1.94    |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Diluted Earnings Per Common Share    |  | $                                               | 0.74    |                                               | $ | 0.49    |   | $    | 3.56    |   | $ | 1.94    |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Weighted Average Shares Outstanding: |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Basic                                |  |                                                 | 66,861  |                                               |   | 81,405  |   |      | 68,836  |   |   | 83,638  |  
|Diluted                              |  |                                                 | 66,922  |                                               |   | 81,468  |   |      | 68,894  |   |   | 83,706  |  
|                                     |  |                                                 |         |                                               |   |         |   |      |         |   |   |         |  
|Cash Dividends Declared Per Share    |  | $                                               | 0.125   |                                               | $ | 0.08    |   | $    | 0.325   |   | $ | 0.24    |  

See notes to condensed consolidated financial
statements.

3

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OMI CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS  (IN THOUSANDS)
(UNAUDITED)

|                                                                                                    |  |                     |           |                    |   |           | 
|--------------------------------------------------------------------------------------------------- |  | ------------------- | --------- | ------------------ | - | --------- | 
|                                                                                                    |  | SEPTEMBER
  30,2006 |           | DECEMBER
  31,2005 |  
|                                                                                                    |  |                     |           |                    |  
|ASSETS                                                                                              |  |                     |           |                    |   |           | 
|Current Assets:                                                                                     |  |                     |           |                    |   |           | 
|Cash, including cash equivalents of $132,973 in
2006 and $29,401
  in 2005                          |  | $                   | 151,032   |                    | $ | 42,297    | 
|Marketable securities                                                                               |  |                     | 26,100    |                    |   |          | 
|Receivables:                                                                                        |  |                     |           |                    |   |           | 
|Traffic receivables, net of allowance for doubtful
accounts of
  $3,778 in 2006 and  $5,600 in 2005 |  |                     | 54,316    |                    |   | 59,358    | 
|Other                                                                                               |  |                     | 7,259     |                    |   | 8,466     | 
|Other prepaid expenses and current assets                                                           |  |                     | 15,057    |                    |   | 16,254    | 
|Restricted cash                                                                                     |  |                     | 3,550     |                    |   | 1,461     | 
|Vessel held for sale                                                                                |  |                     | 21,593    |                    |   |          | 
|                                                                                                    |  |                     |           |                    |   |           | 
|Total Current Assets                                                                                |  |                     | 278,907   |                    |   | 127,836   | 
|                                                                                                    |  |                     |           |                    |   |           | 
|                                                                                                    |  |                     |           |                    |   |           | 
|Vessels                                                                                             |  |                     | 1,539,678 |                    |   | 1,662,786 | 
|Construction in progress (CIP)                                                                      |  |                     |          |                    |   | 84,042    | 
|Other property                                                                                      |  |                     | 5,786     |                    |   | 4,827     | 
|                                                                                                    |  |                     |           |                    |   |           | 
|Total vessels, CIP and other property                                                               |  |                     | 1,545,464 |                    |   | 1,751,655 | 
|Less accumulated depreciation                                                                       |  |                     | 171,258   |                    |   | 179,383   | 
|                                                                                                    |  |                     |           |                    |   |           | 
|Vessels, CIP and other property - net                                                               |  |                     | 1,374,206 |                    |   | 1,572,272 | 
|                                                                                                    |  |                     |           |                    |   |           | 
|                                                                                                    |  |                     |           |                    |   |           | 
|Drydock costs - net of amortization                                                                 |  |                     | 4,323     |                    |   | 4,988     | 
|Restricted cash                                                                                     |  |                     | 150       |                    |   | 148       | 
|Other assets and deferred charges                                                                   |  |                     | 28,483    |                    |   | 22,799    | 
|                                                                                                    |  |                     |           |                    |   |           | 
|Total Assets                                                                                        |  | $                   | 1,686,069 |                    | $ | 1,728,043 | 
|                                                                                                    |  |                     |           |                    |   |           | 
|                                                                                                    |  |                     |           |                    |   |           | 
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                |  |                     |           |                    |   |           | 
|Current
  Liabilities:                                                                              |  |                     |           |                    |   |           | 
|Current portion of long-term debt                                                                   |  | $                   | 24,390    |                    | $ | 34,491    | 
|Accounts payable                                                                                    |  |                     | 15,809    |                    |   | 19,195    | 
|Accrued liabilities:                                                                                |  |                     |           |                    |   |           | 
|Voyage and vessel                                                                                   |  |                     | 11,193    |                    |   | 4,688     | 
|Interest                                                                                            |  |                     | 8,637     |                    |   | 4,634     | 
|Compensation                                                                                        |  |                     | 10,132    |                    |   | 8,126     | 
|Other                                                                                               |  |                     | 10,252    |                    |   | 5,295     | 
|Pool member contributions                                                                           |  |                     | 7,471     |                    |   | 5,018     | 
|Deferred charter hire revenue                                                                       |  |                     | 16,242    |                    |   | 10,799    | 
|Charter hire payable                                                                                |  |                     | 19,383    |                    |   | 10,210    | 
|Dividend payable                                                                                    |  |                     | 8,368     |                    |   | 5,704     | 
|                                                                                                    |  |                     |           |                    |   |           | 
|Total Current Liabilities                                                                           |  |                     | 131,877   |                    |   | 108,160   | 
|                                                                                                    |  |                     |           |                    |   |           | 
|Long-term debt                                                                                      |  |                     | 627,178   |                    |   | 861,376   | 
|Other liabilities                                                                                   |  |                     | 10,048    |                    |   | 41        | 
|Deferred gain on
  sales of vessels                                                                 |  |                     | 44,731    |                    |   | 3,530     | 
|                                                                                                    |  |                     |           |                    |   |           | 
|Stockholders
  equity                                                                              |  |                     | 872,235   |                    |   | 754,936   | 
|                                                                                                    |  |                     |           |                    |   |           | 
|Total Liabilities and Stockholders
Equity                                                          |  | $                   | 1,686,069 |                    | $ | 1,728,043 | 
|                                                                                                    |  |                     |           |                    |   |           | 

See notes to condensed consolidated financial
statements.

4

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OMI
CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS
EQUITYFOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2006
(IN THOUSANDS)
(UNAUDITED)

|                                                            |  |              |        |         |   |          |   |               |         |               |   |               |   |             |        |       |   |          |   |   |         |  
|----------------------------------------------------------- |  | ------------ | ------ | ------- | - | -------- | - | ------------- | ------- | ------------- | - | ------------- | - | ----------- | ------ | ----- | - | -------- | - | - | ------- | -
|                                                            |  |              |        |         |   |          |   |               |         |               |   |               |   | Accumulated |        |       |   |          |   |   |        
|                                                            |  |              |        |         |   |          |   |               |         |               |   |               |   | Other       |        | Total |   |          |   |  
|                                                            |  | Common Stock |        | Capital |   | Retained |   | Comprehensive |         | Stockholders |   | Comprehensive |  
|                                                            |  | Shares       |        | Amount  |   | Surplus  |   | Earnings      |         | (Loss) Income |   | Equity        |   | Income      |       
|                                                            |  |              |        |         |   |          |   |               |         |               |   |               |   |             |       
|Balance at January 1, 2006                                  |  |              | 71,304 |         | $ | 35,652   |   | $             | 75,166  |               | $ | 641,073       |   | $           | 3,045  |       | $ | 754,936  |   |   |         |  
|                                                           
|Comprehensive income:                                       |  |              |        |         |   |          |   |               |         |               |   |               |   |             |        |       |   |          |   |   |         |  
|Net income                                                  |  |              |        |         |   |          |   |               |         |               |   | 245,105       |   |             |        |       |   | 245,105  |   | $ | 245,105 |  
|Other comprehensive income:                                 |  |              |        |         |   |          |   |               |         |               |   |               |   |             |        |       |   |          |   |   |         |  
|Changes in unrealized gain on interest
  rate swaps         |  |              |        |         |   |          |   |               |         |               |   |               |   |             | 1,607  |       |   | 1,607    |   |   | 1,607   |  
|Changes in unrealized loss on FFA
  synthetic time charters |  |              |        |         |   |          |   |               |         |               |   |               |   |             | (9,728 | )     |   | (9,728   | ) |   | (9,728  | )
|                                                            |  |              |        |         |   |          |   |               |         |               |   |               |   |             |        |       |   |          |   |   |         |  
|Total comprehensive income                                  |  |              |        |         |   |          |   |               |         |               |   |               |   |             |        |       |   |          |   | $ | 236,984 |  
|                                                            |  |              |        |         |   |          |   |               |         |               |   |               |   |             |        |       |   |          |   |   |         |  
|                                                            |  |              |        |         |   |          |   |               |         |               |   |               |   |             |        |       |   |          |   |   |         |  
|Dividends on common stock                                   |  |              |        |         |   |          |   |               |         |               |   | (22,163       | ) |             |        |       |   | (22,163  | ) |   |         |  
|Forfeiture of restricted stock
  awards                     |  |              | (30    | )       |   | (15      | ) |               | 15      |               |   |               |   |             |        |       |   |         |   |   |         |  
|Purchase and retirement of common
  stock                   |  |              | (5,423 | )       |   | (2,711   | ) |               | (79,357 | )             |   | (20,075       | ) |             |        |       |   | (102,143 | ) |   |         |  
|Issuance of restricted stock awards                         |  |              | 891    |         |   | 445      |   |               | (445    | )             |   |               |   |             |        |       |   |         |   |   |         |  
|Amortization of restricted stock  awards                    |  |              |        |         |   |          |   |               | 4,621   |               |   |               |   |             |        |       |   | 4,621    |   |   |         |  
|                                                            |  |              |        |         |   |          |   |               |         |               |   |               |   |             |        |       |   |          |   |   |         |  
|Balance at September 30, 2006                               |  |              | 66,742 |         | $ | 33,371   |   | $             |        |               | $ | 843,940       |   | $           | (5,076 | )     | $ | 872,235  |   |   |         |  
|                                                            |  |              |        |         |   |          |   |               |         |               |   |               |   |             |        |       |   |          |   |   |         |  

See notes to condensed consolidated financial statements.

5

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OMI
CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(IN THOUSANDS)
(UNAUDITED)

|                                                          |  |                                             |          |      |   |          |  
|--------------------------------------------------------- |  | ------------------------------------------- | -------- | ---- | - | -------- | -
|                                                          |  | FOR THE
  NINE MONTHS
  ENDED SEPTEMBER 30, |         
|                                                          |  | 2006                                        |          | 2005 |  
|                                                          |  |                                             |          |      |  
|                                                          |  |                                             |          |      |   |          |  
|Net cash provided by operating activities                 |  | $                                           | 247,406  |      | $ | 241,575  |  
|                                                          |  |                                             |          |      |   |          |  
|                                                          |  |                                             |          |      |   |          |  
|CASH FLOWS USED BY INVESTING ACTIVITIES:                  |  |                                             |          |      |   |          |  
|Additions to vessels and other property                   |  |                                             | (115,513 | )    |   | (134,351 | )
|Proceeds from disposition of vessels                      |  |                                             | 376,522  |      |   | 36,752   |  
|Payments for marketable securities                        |  |                                             | (26,100  | )    |   |         |  
|Payments for restricted cash                              |  |                                             | (2,841   | )    |   |         |  
|Payments for acquisitions, net of cash acquired of
$3,453 |  |                                             | (5,545   | )    |   |         |  
|Escrow of funds                                           |  |                                             | 747      |      |   | 7,184    |  
|Other                                                     |  |                                             |         |      |   | (3,108   | )
|                                                          |  |                                             |          |      |   |          |  
|Net cash provided (used) by investing activities          |  |                                             | 227,270  |      |   | (93,523  | )
|                                                          |  |                                             |          |      |   |          |  
|                                                          |  |                                             |          |      |   |          |  
|CASH FLOWS USED BY FINANCING ACTIVITIES:                  |  |                                             |          |      |   |          |  
|Proceeds from debt                                        |  |                                             | 47,000   |      |   | 179,958  |  
|Payments on debt                                          |  |                                             | (291,299 | )    |   | (199,855 | )
|Payments for debt issue costs                             |  |                                             |         |      |   | (1,836   | )
|Proceeds from issuance of common stock                    |  |                                             |         |      |   | 535      |  
|Payments of dividends                                     |  |                                             | (19,499  | )    |   | (19,470  | )
|Payments for the purchase of common stock                 |  |                                             | (102,143 | )    |   | (120,872 | )
|                                                          |  |                                             |          |      |   |          |  
|Net cash used by financing activities                     |  |                                             | (365,941 | )    |   | (161,540 | )
|                                                          |  |                                             |          |      |   |          |  
|                                                          |  |                                             |          |      |   |          |  
|Net increase (decrease) in cash and cash equivalents      |  |                                             | 108,735  |      |   | (13,488  | )
|Cash and cash equivalents at beginning of year            |  |                                             | 42,297   |      |   | 41,805   |  
|                                                          |  |                                             |          |      |   |          |  
|Cash and cash equivalents at end of period                |  | $                                           | 151,032  |      | $ | 28,317   |  
|                                                          |  |                                             |          |      |   |          |  

See notes to condensed consolidated financial
statements.

6

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OMI CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

Note 1  Basis of Presentation and Summary of
Significant Accounting Policies

OMI
Corporation (OMI or the Company) is a leading seaborne transporter of crude
oil and refined petroleum products operating in the international shipping
markets. The unaudited condensed consolidated interim financial statements of
OMI are prepared in conformity with accounting principles
generally accepted in the United States of America (GAAP) and the Securities
and Exchange Commissions instructions to Form 10-Q. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial position and results of
operations for the periods presented have been included. The condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained in the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2005. The
statements of income for the three and nine months ended September 30, 2006 are
not necessarily indicative of the results for the entire fiscal year ending
December 31, 2006.

The
condensed consolidated financial statements include the financial statements of
the Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.

Reclassifications  Certain
reclassifications have been
made to the condensed consolidated financial statements for the 2005 period to
conform to the 2006 presentation. These reclassifications were made to present
2005 balance sheet and cash flow information in a condensed format for comparative
purposes and had no impact on previously recorded net income.

Marketable
Securities  The
Company invests in auction rate securities which are considered highly liquid
by market participants because of the auction process and contractual
maturities of less than one year. These investments are reported in accordance
with the provisions of Statement of Financial Accounting Standards (SFAS) No.
115, Accounting for Certain Investments in Debt and Equity Securities. The
Company classifies these short-term investments as available-for-sale and they
are reported at fair value which approximates cost at September 30, 2006. The
fair value of short-term investments is based on quoted market prices.

Gemini
Pool  Revenues include the gross revenue
generated by vessels in the Gemini Suezmax Pool (Gemini), which is operated by
Gemini Tankers LLC, a wholly owned subsidiary of OMI. The Gemini Pool, a pool
for double hull Suezmax vessels began in December 2003. As of September 30,
2006, there were 16 Suezmaxes (9 of OMIs and 7 from other shipowners)
operating in the pool. The earnings of the pool are allocated to the pool
members using an agreed upon formula.

The
table below provides summary information (in thousands) of gross revenues, voyage expense and charter
hire expense from the Gemini Pool for the three and nine months ended
September 30, 2006 and 2005 for OMI and non-OMI vessels operating in the Gemini
Pool:

7

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|                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|------------------------ |  | ------------------------------------------ | ------ | ----------------------------------------- | - | ------ |  | ---- | ------- |  | - | ------- | 
|                         |  | For the Three Months
  Ended September 30, |        | For the Nine Months
  Ended September 30, |  
|                         |  | 2006                                       |        | 2005                                      |   | 2006   |  | 2005 |        
|                         |  |                                            |        |                                           |   |        |  |      |        
|                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|Revenue:                 |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|OMI Vessels              |  | $                                          | 56,739 |                                           | $ | 57,534 |  | $    | 203,239 |  | $ | 232,554 | 
|Non-OMI Vessels          |  |                                            | 40,514 |                                           |   | 12,119 |  |      | 111,171 |  |   | 40,451  | 
|                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|                         |  | $                                          | 97,253 |                                           | $ | 69,653 |  | $    | 314,410 |  | $ | 273,005 | 
|                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|Voyage Expenses:         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|OMI Vessels              |  | $                                          | 15,200 |                                           | $ | 19,178 |  | $    | 56,599  |  | $ | 59,640  | 
|Non-OMI Vessels          |  |                                            | 11,191 |                                           |   | 4,527  |  |      | 28,198  |  |   | 10,234  | 
|                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|                         |  | $                                          | 26,391 |                                           | $ | 23,705 |  | $    | 84,797  |  | $ | 69,874  | 
|                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|Charter Hire
  Expenses: |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|OMI Vessels              |  | $                                          |       |                                           | $ |       |  | $    |        |  | $ |        | 
|Non-OMI Vessels          |  |                                            | 29,272 |                                           |   | 8,133  |  |      | 78,842  |  |   | 26,953  | 
|                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|                         |  | $                                          | 29,272 |                                           | $ | 8,133  |  | $    | 78,842  |  | $ | 26,953  | 
|                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 

We
recognize Gemini revenue and expenditures on a gross basis, in accordance with
guidance in EITF Issue No. 99-19 relating to indicators of gross revenue
reporting, as Gemini controls the deployment of the vessel, has the ability to
establish price and negotiate terms of a contract (which is in Geminis name)
with a customer and incurs all voyage expenses.

Goodwill
and Other Purchased Intangible Assets  Effective January 1, 2002,
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and
Other Intangible Assets (SFAS No. 142) was adopted, but did not have an
impact on the Companys financial statements upon adoption. SFAS No. 142
requires the testing of goodwill, which represents the excess of the purchase
price over the fair value of net assets acquired, and indefinite-lived
intangible assets for impairment rather than amortizing them. OMI performs
impairment tests annually, or more often as circumstances require. If it is
determined that an impairment has occurred, an appropriate charge to operations
will be recorded.

In
July and September 2006, OMI purchased two management companies previously
engaged by the Company for crewing and technical services of OMIs vessels for
an aggregate purchase price of $5,545,000, net of cash acquired of $3,453,000.
For the nine months ended September 30, 2006, the excess of the purchase price
over the fair value of the net assets acquired of $7,385,000 was recorded to
goodwill and other intangibles, which has been included as a component of other
assets and deferred charges in the Condensed Consolidated Balance Sheet. The
purchase price allocation is preliminary and is subject to adjustment. The pro
forma impact on the Companys Condensed Consolidated Statement of Income for
the three and nine months ended September 30, 2006 had the acquisitions taken
place on January 1, 2006 would be insignificant.

Recent
Accounting Pronouncements  Except for Statement of Financial Accounting
Standards No. 123 (revised 2004), Share-Based
Payment, (SFAS 123(R)), no new accounting pronouncements that
became effective during the three and nine months ended September 30, 2006, had
an effect on our financial position or results of operations. The additional disclosure
requirements of SFAS
No. 123 (R) are presented in Note 6.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurement (SFAS No. 157). SFAS No. 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about assets and liabilities measured at fair value. This Statement does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of SFAS No. 157, and has not yet determined the impact that its adoption will have on its results of operations and financial position.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
(SAB 108), which provides interpretive guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 is effective for the Company
as of December 31, 2006. The Company is currently assessing the impact of SAB No. 108, and does not believe that its adoption will have a material impact on its results of operations and financial position.

8

---



Note 2  Long-Term Debt and Credit
Arrangements

As
of September 30, 2006, the Companys debt and credit arrangements consisted of
the following (in thousands):

|                                                                                                                                                                          |  |   |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------- | 
|Secured debt:                                                                                                                                                             |  |   |         | 
|Variable rates:                                                                                                                                                           |  |   |         | 
|Based on the London
  Interbank Offering Rate (LIBOR) plus a margin with an average interest rate
  of 5.83%, due in varying installments and maturities to 2015(1),(2) |  | $ | 283,912 | 
|Fixed rate:                                                                                                                                                               |  |   |         | 
|5.30% Due October 2013                                                                                                                                                    |  |   | 22,900  | 
|Unsecured debt:                                                                                                                                                           |  |   |         | 
|7.625% Unsecured
  Senior Notes due December 2013                                                                                                                         |  |   | 200,000 | 
|2.875% Unsecured
  Convertible Senior Notes due December 2024                                                                                                             |  |   | 144,756 | 
|                                                                                                                                                                          |  |   |         | 
|Total                                                                                                                                                                     |  |   | 651,568 | 
|Less current portion
  of long-term debt                                                                                                                                  |  |   | 24,390  | 
|                                                                                                                                                                          |  |   |         | 
|Long-term debt                                                                                                                                                            |  | $ | 627,178 | 
|                                                                                                                                                                          |  |   |         | 

|    |                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The margins on the variable rate debt outstanding at
  September 30, 2006 ranged from 0.675% to 0.80%. Under our loan agreements,
  LIBOR can range from 30 days to one year.                                                                                                                                                                        
|(2) | As of September 30,
  2006, OMI had various interest rate swaps with notional amounts aggregating
  $172,963,000 (not including $100,000,000 scheduled to begin in the fourth
  quarter of 2006) of variable rate debt ranging from 2.90% to 5.32% (excluding
  margins) with maturity dates of the swaps ranging from October 2008 to August
  2012.

As
of September 30, 2006, the available undrawn amount under our credit facilities
aggregated $515,532,000. During the nine months ended September 30, 2006, as a
result of the sales of the SACRAMENTO and the SOMJIN (see Note 9), the
available amount under the $375 Facility was reduced by an aggregate of
$65,449,000. During August 2006, in anticipation of the sale of the ISERE the
$375 Facility was reduced by another $16,300,000. The semi-annual reductions
were reduced to $6,567,000 and the remaining balloon payment at maturity in
November 2014 is now $94,133,000.

During
the nine months ended September 30, 2006, as a result of the sale of the
OTTAWA, TAMAR and POTOMAC, we repaid term loans with outstanding balances
totaling $74,330,000 (see Note 9).

In
October 2006, OMI prepaid the remaining balance of the $34.475 million term
loan due August 2011 in the amount of $26,495,000.

Interest
Paid

During
the nine months ended September 30, 2006 and 2005, cash paid for interest, net
of $878,000 and $2,779,000 for capitalized interest, totaled approximately
$25,556,000 and $16,859,000, respectively.

9

---



Note 2  Long-Term Debt and Credit
Arrangements (cont.)

Restrictive
Covenants

All
of our loan agreements contain restrictive covenants as to cash, maintenance of
specified financial ratios, collateral values and other non-financial
restrictions. As of September 30, 2006, we were in compliance with all
covenants.

Note 3  Financial Instruments

The
Company has derivative financial instruments to guard against the risks of (1)
increases in interest rates, which can impact results of operations, and (2)
declines in future spot market rates of our ships, which would reduce revenues
on future voyages of vessels trading in the spot market. All derivatives are
recognized on the Companys balance sheet at their fair values. For accounting
hedges, on the date the derivative contract is entered into the Company
designates the derivative as (1) a hedge of the fair value of a recognized
asset or liability or of an unrecognized firm commitment (fair value hedge)
or (2) a hedge of a forecasted transaction (cash flow hedge).

Interest
Rate Swaps

As
of September 30, 2006, the Company had interest rate swaps to effectively
convert the majority of our variable rate debt from a floating to a fixed-rate
basis. The Company has designated these interest rate swaps as cash flow hedges
for accounting purposes. These swap contracts were deemed effective hedges, and
therefore, the change in the fair value of the interest rate swap was recorded
in Other comprehensive income.

As
of September 30, 2006, we had various interest rate swaps aggregating
$272,963,000 on various debt tranches with a range of 2.9% to 5.32% expiring
from October 2008 to November 2014. The Company pays fixed-rate interest
amounts and receives floating-rate interest amounts based on three-month LIBOR
settings. As of September 30, 2006, the fair market value of the interest rate
swaps resulted in an unrealized gain of $4,654,000, and an asset of $4,654,000.
The unrealized gain was recorded to Other comprehensive income.

Forward
Freight Agreements

The
Company has entered into forward freight agreements (FFAs). We use FFAs as
economic and accounting hedges to the Company. For FFAs that are economic or
speculative hedges, such changes in the fair value the FFAs are recorded to the
Companys statement of income each reporting period. In 2006, we have
designated certain FFAs as hedges for accounting purposes, and, as such,
changes in the fair value of such FFAs are recorded to equity in the Companys
balance sheet each reporting period. FFAs involve contracts to provide theoretical
voyages at fixed rates. The FFA contracts settle based on the monthly Baltic
Tanker Index (BITR). The BITR average rates received in the spot market are
by cargo type and trade route for crude oil and refined petroleum products.

10

---



Note 3  Financial Instruments (cont.)

The
duration of a contract can be one month, quarterly or up to three years with
open positions settling on a monthly basis. We have taken short positions in
FFA contracts as a hedge to reduce a portion of the Companys exposure to the
spot charter market by creating synthetic time charters. From time to time we
have also taken long positions, which have increased our exposure to the spot
market.

The
table below represents the FFA contracts (synthetic time charters), which are
designated as cash flow hedges, that the company has entered into during the
nine months ended September 30, 2006:

|                 |  |                |                    |                             |  |                          |  |  |   |        |  | 
|---------------- |  | -------------- | ------------------ | --------------------------- |  | ------------------------ |  |  | - | ------ |  | 
|Contracts
  From |  | Contracts
  To |                    | Number of 
  Vessels Hedged |  | Average TCEContract Rate | 
|                 |  |                |                    |                             |  |                          | 
|                 |  |                |                    |                             |  |                          |  |  |   |        |  | 
|October 1, 2006  |  |                | December 31, 2006  |                             |  | 4.0 Suezmaxes            |  |  | $ | 38,800 |  | 
|January 1, 2007  |  |                | June 30, 2009      |                             |  | 3.5 Suezmaxes            |  |  | $ | 37,500 |  | 
|July 1, 2009     |  |                | September 30, 2009 |                             |  | 1.0 Suezmaxes            |  |  | $ | 40,200 |  | 

As of September 30, 2006, the Company has recorded a liability of $10,003,000
related to the fair value of these hedges within Other liabilities, an asset of
$274,000 within Other assets and deferred charges, and a corresponding
unrealized loss of $9,729,000 to Other comprehensive income in the Condensed
Consolidated Balance Sheet. For the nine months ended September 30, 2006, the
realized loss on closed speculative contracts aggregated $125,000 and the
unrealized gain on the open contracts of $2,099,000 is recorded in Other in the
Condensed Consolidated Statement of Income.

At
September 30, 2006, the FFAs (including both economic, or speculative hedges,
and accounting hedges) had an aggregate notional value of $179,368,000, which
was an aggregate of our short and long positions that extend to October 2009.

The
Company is exposed to credit loss in the event of non-performance by the
counter parties to the interest rate swap agreements and forward freight
agreements; however, the Company does not anticipate non-performance by any of
the counter parties.

Note 4  Earnings Per Common Share

The
computation of basic earnings per share is based on the weighted average number
of common shares outstanding during the period. The computation of diluted
earnings per share assumes the foregoing and the exercise of stock options
using the treasury stock method and the conversion of the 2.875% Unsecured
Convertible Senior Notes due 2024 (2.875% Convertible Notes) to the extent
dilutive.

The
components of the denominator for the calculation of basic and diluted earnings
per share and the results of such calculations are as follows:

11

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Note 4  Earnings Per Common Share (cont.)

|                                                   |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|-------------------------------------------------- |  | ------------------------------------------ | ------ | ----------------------------------------- | - | ------ |  | ---- | ------- |  | - | ------- | 
|                                                   |  | For the Three Months
  Ended September 30, |        | For the Nine Months
  Ended September 30, |  
|(in
  thousands, except per share amounts)         |  | 2006                                       |        | 2005                                      |   | 2006   |  | 2005 |        
|                                                   |  |                                            |        |                                           |   |        |  |      |        
|Numerator:                                         |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|Net income                                         |  | $                                          | 49,770 |                                           | $ | 39,611 |  | $    | 245,105 |  | $ | 162,528 | 
|                                                   |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|                                                   |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|Denominator:                                       |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|Basic weighted average common
  shares outstanding |  |                                            | 66,861 |                                           |   | 81,405 |  |      | 68,836  |  |   | 83,638  | 
|Effect of dilutive securities:                     |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|Options                                            |  |                                            | 61     |                                           |   | 63     |  |      | 58      |  |   | 68      | 
|                                                   |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|Diluted weighted average common
  shares           |  |                                            | 66,922 |                                           |   | 81,468 |  |      | 68,894  |  |   | 83,706  | 
|                                                   |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|                                                   |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|Basic earnings per common share                    |  | $                                          | 0.74   |                                           | $ | 0.49   |  | $    | 3.56    |  | $ | 1.94    | 
|                                                   |  |                                            |        |                                           |   |        |  |      |         |  |   |         | 
|Diluted earnings per common share                  |  | $                                          | 0.74   |                                           | $ | 0.49   |  | $    | 3.56    |  | $ | 1.94    | 

In
September 2006, the Board increased the quarterly dividend by 25% and declared
a dividend of $0.125 per share to shareholders of record on October 2, 2006.
The dividend of $8,368,000 was paid on October 11, 2006, and in 2006 we have
paid total dividends of $0.405 per share. When the October dividend was
paid, the conversion ratio and conversion price for our 2.875% Convertible
Notes ($144,756,000 currently outstanding) were adjusted as per the
agreement, the threshold of $0.28 per share was reached. The conversion ratio
increased from 32.5895 to 32.7842 for each $1,000 bond, and the conversion price
decreased from $30.68 to $30.50 per share, which was 40% above our stock price
of $21.71 at September 30, 2006.

Note 5  Equity Transactions

Restricted Stock Awards

Increases
in common stock outstanding resulting from restricted stock awards and
decreases relating to forfeitures of restricted stock awards are discussed in
Note 6.

Acquisition and Retirement of Common Stock

The
Company has a stock buy back and retirement program in place. In February,
April and September 2006, the Board approved three repurchase programs, each
authorizing $70,000,000 for the repurchase of common stock. For the three
months ended September 30, 2006, we repurchased and retired 319,000 shares of
common stock at an average of $21.26 per share, aggregating approximately
$6,783,000. For
the nine months ended September 30, 2006, we repurchased and retired 5,422,800
shares of common stock at an average of $18.84 per share, aggregating
approximately $102,143,000. At September 30, 2006, the February authority was
completed and approximately $108,014,000 remained from the April and September
2006 authorities.

12

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Note 5  Equity Transactions (cont.)

During
October and up to November 6, 2006, we repurchased 3,565,000 shares of common
stock at an average price of $22.24 per share, aggregating approximately
$79,286,000.
As of November 6, 2006, there are 63,177,201 shares of common stock
outstanding and $28,728,000 remains under Board authorities for share
repurchases.

During
the three months ended September 30, 2005, we repurchased 4,231,000 shares of
common stock at an average price of $17.44 per share, aggregating $73,800,000,
and during the nine months ended September 30, 2005, we repurchased 7,744,000
shares of common stock at an average price of $17.95 per share, aggregating
$139,011,000.

Cash
Dividends

On September
7, 2006, the Board of Directors of OMI approved an increase in the regular
quarterly dividend from $0.10 to $0.125 and declared a dividend on its common
stock to
shareholders based on the number of common shares outstanding to holders
of record on October 2, 2006. As of September 30, 2006, $8,368,000 was accrued
and included in Dividend payable in the Condensed Consolidated Balance Sheets.
The dividend was paid on October 11, 2006. The second quarter dividend of
$6,720,000 was paid on July 5, 2006.

Note 6  Share Based Compensation

Incentive Compensation Plans

At
September 30, 2006, the Company had share-based awards outstanding under three
stock-based incentive compensation plans: the 2003 Stock Incentive Plan, the
2001 Restricted Stock Plan and the 1998 Stock Option Plan. These plans provided
for the granting of options and restricted stock awards to officers, employees,
consultants and directors for purchase of or to acquire the Companys common
shares. A detailed description of these plans can be found in the Companys
2005 Annual Report on Form 10-K.

On
April 27, 2006, our shareholders approved the 2006 Incentive Compensation Plan.
This plan provides for, at the discretion of the Compensation Committee, awards
of up to 5,000,000 shares of restricted stock awards, stock options or other
form of share-based compensation to directors, officers, employees and
consultants of the Company. No further awards may be made under any of the
prior plans. As of September 30, 2006, 891,079 shares of restricted stock
awards had been granted to officers, directors and employees.

Adoption of SFAS 123(R)

Effective
January 1, 2006, OMI adopted SFAS 123(R), as amended. SFAS 123(R) requires the
Company to expense the estimated fair value of stock options and similar equity
instruments issued to employees. During 2003, OMI adopted the fair value
recognition provisions of SFAS 123, Accounting for Stock Based Compensation, as
amended by SFAS 148, Accounting for Stock Based Compensation  Transition and
Disclosure to account prospectively for share-based compensation issued after
December 31, 2002. In accordance with the modified prospective transition
method, results of prior periods have not been restated.

13

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Note 6  Share Based Compensation (cont.)

Upon
adoption of SFAS 123(R) and the transition method we previously adopted,
compensation expense recognized during the three and nine months ended
September 30, 2006 included compensation expense for all share-based awards
(all of which are restricted stock awards) granted prior to, but not yet vested
as of January 1, 2006, based on the grant date fair value estimated in
accordance with the original provisions of SFAS No. 123. There was no
compensation expense for stock options in the first nine months of 2006 as all
stock options were fully vested as of January 1, 2006. All of the Company stock
award plans are considered equity plans under SFAS No. 123(R).

Unearned
Compensation  Restricted Stock, included separately in the equity section of
the Condensed Consolidated Balance Sheet at December 31, 2005, representing the
non-vested portion of the restricted stock awards, was reclassified with
capital surplus on the Condensed Consolidated Statement of Changes in
Stockholders Equity for the nine months ended September 30, 2006.

There
was no adjustment upon adoption of SFAS 123(R) for estimated forfeitures on
previously granted restricted stock awards as the estimated forfeiture rate was
less than 1%. The effect of adopting SFAS No. 123(R) was not material to the
Companys condensed consolidated financial statements and earnings per share
for the three and nine months ended September 30, 2006, and there was no
cumulative effect upon adoption using the modified-prospective transition
method.

Stock Options

As
of September 30, 2006, there were 79,000 stock options outstanding with a
weighted average exercise price of $5.21 per share. All of the 79,000 options
were vested prior to January 1, 2006, and there were no options exercised
during the nine months ended September 30, 2006. During the nine months ended
September 30, 2005, cash received upon the exercise of stock options was
$535,000.

The
following table summarizes the information regarding the outstanding stock
options at September 30, 2006:

|                |  |                     |        |                                       |   |                                               |  |         |      |                                       |  |        |  |   |      | 
|--------------- |  | ------------------- | ------ | ------------------------------------- | - | --------------------------------------------- |  | ------- | ---- | ------------------------------------- |  | ------ |  | - | ---- | 
|                |  | Options Outstanding |        | Options Exercisable                   |  
|                |  |                     |        |                                       |  
|                |  |                     |        |                                       |  
|Exercise Prices |  | Options             |        | Weighted
  Average
  Exercise
  Price |   | Weighted
  Average
  Remaining
  Life (Years) |  | Options |      | Weighted
  Average
  Exercise
  Price | 
|                |  |                     |        |                                       |   |                                               |  |         |      |                                       | 
|                |  |                     |        |                                       |   |                                               |  |         |      |                                       |  |        |  |   |      | 
|$  6.67         |  |                     | 30,000 |                                       | $ | 6.67                                          |  |         | 1.74 |                                       |  | 30,000 |  | $ | 6.67 | 
|4.9375          |  |                     | 19,000 |                                       |   | 4.94                                          |  |         | 1.27 |                                       |  | 19,000 |  |   | 4.94 | 
|3.93            |  |                     | 30,000 |                                       |   | 3.93                                          |  |         | 7.62 |                                       |  | 30,000 |  |   | 3.93 | 
|                |  |                     |        |                                       |   |                                               |  |         |      |                                       |  |        |  |   |      | 
|                |  |                     | 79,000 |                                       | $ | 5.21                                          |  |         | 3.86 |                                       |  | 79,000 |  | $ | 5.21 | 
|                |  |                     |        |                                       |   |                                               |  |         |      |                                       |  |        |  |   |      | 

14

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Note 6 
Share Based Compensation (cont.)

Restricted
Stock Awards

The
table below summarizes the Companys restricted stock awards as of September
30, 2006:

|                                    |  |               |   |                                       |       | 
|----------------------------------- |  | ------------- | - | ------------------------------------- | ----- | 
|                                    |  | # of
  Shares |   | Weighted
  Average
  Grant Date Price |      
|                                    |  |               |   |                                       |      
|                                    |  |               |   |                                       |       | 
|Outstanding at
  January 1, 2006    |  | 1,943,119     |   | $                                     | 11.12 | 
|                                    |  |               |   |                                       |       | 
|Granted                             |  | 891,079       |   |                                       | 19.08 | 
|Vested (1)                          |  | (368,187      | ) |                                       | 6.73  | 
|Forfeited                           |  | (20,000       | ) |                                       | 19.30 | 
|                                    |  |               |   |                                       |       | 
|Outstanding at
  September 30, 2006 |  | 2,446,011     |   | $                                     | 12.39 | 
|                                    |  |               |   |                                       |       | 

(1)       Vested in connection with
restricted shares means that the restrictions have lapsed.

The
fair value of restricted stock at the grant date is equal to the closing stock
price on that date. The Company is amortizing unearned compensation over the
applicable vesting periods. We recognized compensation expense related to
restricted stock of $1,783,000 and $1,313,000 during the three months ended September 30, 2006 and 2005, respectively,
and $4,621,000 and $2,780,000 during
the nine months ended September 30, 2006 and 2005, respectively.

As
of September 30, 2006, unrecognized compensation cost related to unvested
restricted stock aggregated $26,129,000, which will be recognized over a
weighted average period of 3.5 years. During the three and nine months ended
September 30, 2006, the fair value of the 343,187 and 368,187 shares that
vested was approximately $2,122,000 and $2,478,000, respectively. No shares vested during the three and nine
months ended September 30, 2005.

Note 7 
Acquisitions/Vessel Deliveries

During
the nine months ended September 30, 2006, OMI took delivery of five 2006 built
vessels. The following table summarizes the acquisitions of vessels delivered
during the 2006 period and capitalized costs, which includes capitalized
interest:

|                 |  |                  |  |                  |  |                     |         | 
|---------------- |  | ---------------- |  | ---------------- |  | ------------------- | ------- | 
|Name of
  Vessel |  | Type of
  Vessel |  | Date
  Delivered |  | Capitalized
  Costs |        
|                 |  |                  |  |                  |  |                     |        
|                 |  |                  |  |                  |  | (in thousands)      |        
|WABASH           |  | Handymax         |  | January 2006     |  | $                   | 41,837  | 
|RHINE            |  | Handysize        |  | February 2006    |  |                     | 30,212  | 
|KANSAS           |  | Handymax         |  | March 2006       |  |                     | 41,676  | 
|REPUBLICAN       |  | Handymax         |  | March 2006       |  |                     | 41,698  | 
|PLATTE           |  | Handymax         |  | May 2006         |  |                     | 42,159  | 
|                 |  |                  |  |                  |  |                     |         | 
|Total            |  |                  |  |                  |  | $                   | 197,582 | 
|                 |  |                  |  |                  |  |                     |         | 

The
final payments on the 2006 deliveries were paid with cash from operations.
These vessels are unencumbered by debt.

15

---



Note 8  Vessel Held for Sale

During
May 2006, OMI agreed to sell the 1999 built handysize product tanker, the
ISERE, for a sales price, net of commissions, of $35,150,000. As of September
30, 2006, the approximate book value of $21,593,000 was recorded to Vessel held
for sale on the Condensed Consolidated Balance Sheet. Upon delivery to the new
owners on October 10, 2006, the gain on the sale of approximately $13,244,000
was recognized within the clean segment in Gain on disposal of vessels in the
Consolidated Statement of Income. As a result of the sale, available amounts
under our $375 Facility were reduced by $16,300,000.

Note 9 
Disposals of Vessels

The
table below summarizes the disposal of vessels at each of the vessels
respective sale date for the nine months ended September 30, 2006:

|              |  |                     |  |              |  |                |  |                      |         |                                 |   |                                            |  |                                          |        |  |             | 
|------------- |  | ------------------- |  | ------------ |  | -------------- |  | -------------------- | ------- | ------------------------------- | - | ------------------------------------------ |  | ---------------------------------------- | ------ |  | ----------- | 
|Vessel        |  | Reporting
  Segment |  | Year
  Built |  | Date of
  Sale |  | Net
  Sales Price(1) |         | Gain on
  Disposal of
  Vessels |   | Deferred
  Gain on
  Disposal of
  Vessels |  | Expiration
  Date of Vessel
  Charter-in |       
|              |  |                     |  |              |  |                |  |                      |         |                                 |   |                                            |  |                                          |       
|              |  | (in thousands)      | 
|SOMJIN(2)     |  | Crude               |  | 2001         |  | June
  2006    |  | $                    | 74,250  |                                 | $ | 23,193                                     |  |                                          |       |  | August 2009 | 
|HUDSON(3)     |  | Crude               |  | 2000         |  | May
  2006     |  |                      | 71,280  |                                 |   | 26,358                                     |  |                                          |       |  |            | 
|SACRAMENTO(3) |  | Crude               |  | 1998         |  | April
  2006   |  |                      | 68,929  |                                 |   | 28,487                                     |  |                                          |       |  |            | 
|POTOMAC(4)    |  | Crude               |  | 2000         |  | April
  2006   |  |                      | 72,472  |                                 |   |                                           |  |                                          | 26,510 |  | April 2011  | 
|TAMAR(5)      |  | Clean               |  | 2003         |  | March
  2006   |  |                      | 44,795  |                                 |   |                                           |  |                                          | 9,976  |  | July 2010   | 
|OTTAWA(5)     |  | Clean               |  | 2003         |  | March
  2006   |  |                      | 44,796  |                                 |   |                                           |  |                                          | 10,464 |  | March 2010  | 
|              |  |                     |  |              |  |                |  |                      |         |                                 |   |                                            |  |                                          |        |  |             | 
|              |  |                     |  |              |  |                |  | $                    | 376,522 |                                 | $ | 78,038                                     |  | $                                        | 46,950 |  |             | 
|              |  |                     |  |              |  |                |  |                      |         |                                 |   |                                            |  |                                          |        |  |             | 

|    |                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Sales price is net of commission.                                                                                                                                                                                 
|(2) | The SOMJIN is being time chartered back to OMI for a
  period of three years. There are no guaranteed charter hire payments, as the
  rates will be based on the rate the vessel earns in the Gemini Suezmax Pool.
|(3) | The vessels are operating in the Gemini Suezmax Pool in
  accordance with the terms of the pool agreement.                                                                                                        
|(4) | After delivery to the new owners the POTOMAC was renamed
  the CAPE BANTRY and was time chartered-in (accounted for as an operating
  lease) to OMI for five years.                                               
|(5) | The OTTAWA and TAMAR are being bareboat chartered-in
  (accounted for as an operating lease) for approximately four years to OMI and
  continue their previously contracted time charters out.                    

The
vessels chartered back to OMI in the sale leaseback transactions indicated
above are being treated as operating leases. The Deferred gain on disposal of
vessels on the Consolidated Balance Sheets is being amortized to Charter hire
expense over the term of each vessels lease term.

Term
loans (see Note 2) of $74,330,000 were repaid upon the disposals of the
POTOMAC, OTTAWA and TAMAR, and available amounts under OMIs $375 Facility were
reduced by $65,449,000 upon the sale of the SACRAMENTO and the SOMJIN. The
remaining balance of the HUDSONs term loan of $25,165,000 was maintained, and
the Company substituted an unencumbered vessel as replacement collateral; the
loan was repaid in October (see Note 2).

16

---



Note 9 
Disposals of Vessels (cont.)

During
October 2006, OMI agreed to sell the four product carriers, MARNE, RUBY, ASHLEY
and GANGES for a combined sales price of approximately $180,500,000. The MARNE
is scheduled to be delivered to the new owners by the end of December 2006. The gain on
the sale of approximately $16,500,000 will be recognized within the clean
segment in Gain on disposal of vessels in the Consolidated Statement of Income.
In conjunction with the sale of the vessel the $320 Facility will be reduced by $19,984,000.

The
RUBY is scheduled to be delivered to the new owners in November 2006. Upon
delivery, the vessel will be chartered back to OMI for a period of three years.
The gain on the sale of approximately $11,600,000 will be included in Deferred
gain on disposal of vessels on the Consolidated Balance Sheet and will be
amortized to Charter hire expense over the term of the lease. In conjunction with the sale of
the vessel a term loan of $22,759,000 will be repaid.

The
ASHLEY is scheduled to be delivered to the new owners in February 2007. The
gain on the sale of approximately $16,000,000 will be recognized within the
clean segment in Gain on disposal of vessels in the Consolidated Statement of Income.
In conjunction with the sale of the vessel the $320 Facility will be reduced by $19,318,000.

The
GANGES is scheduled to be delivered to the new owners in February 2007. Upon
delivery, the vessel will be chartered back to OMI for a period of three years.
The gain on the sale of approximately $19,300,000 will be included in Deferred
gain on disposal of vessels on the Consolidated Balance Sheet and will be
amortized to Charter hire expense over the term of the lease. In conjunction with the sale of
the vessel a term loan of $17,706,000 will be repaid.

Note 10
- Financial Information Relating to Segments

The
Company organizes its business principally into two operating segments, the
Crude Fleet and the Clean Fleet. These segments and their respective operations
are as follows:

Crude
Fleet - Includes vessels that normally carry heavy fuel
oil or dirty products. The current fleet includes one size vessel, Suezmax
tanker. The 2005 results include the handysize vessels sold in January 2005.

Clean
Fleet - Includes vessels that normally carry refined
petroleum products such as gasoline.
This fleet includes three sizes of vessels: Panamax, handymax and handysize
vessels.

The
following is a summary by major operating segments for the three and nine
months ended September 30, 2006 and September 30, 2005 and segment assets as of
September 30, 2006 and December 31, 2005:

17

---



Note 10
 Financial Information Relating to Segments (cont.)

|                                                            |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|----------------------------------------------------------- |  | ------------------------------------------ | ------- | ----------------------------------------- | - | ------- | - | ---- | ------- | - | - | ------- | -
|                                                            |  | For the Three Months
  Ended September 30, |         | For the Nine Months
  Ended September 30, |  
|(in thousands)                                              |  | 2006                                       |         | 2005                                      |   | 2006    |   | 2005 |        
|                                                            |  |                                            |         |                                           |   |         |   |      |        
|Revenue:                                                    |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|Crude Fleet                                                 |  | $                                          | 104,999 |                                           | $ | 79,396  |   | $    | 341,907 |   | $ | 283,365 |  
|Clean Fleet                                                 |  |                                            | 75,289  |                                           |   | 63,565  |   |      | 213,393 |   |   | 178,729 |  
|                                                            |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|Subtotal                                                    |  |                                            | 180,288 |                                           |   | 142,961 |   |      | 555,300 |   |   | 462,094 |  
|Other                                                       |  |                                            | 862     |                                           |   | 243     |   |      | 2,312   |   |   | 1,026   |  
|                                                            |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|Total                                                       |  | $                                          | 181,150 |                                           | $ | 143,204 |   | $    | 557,612 |   | $ | 463,120 |  
|                                                            |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|Time Charter Equivalent
Revenue:(1)                         |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|Crude Fleet                                                 |  | $                                          | 78,340  |                                           | $ | 54,119  |   | $    | 255,763 |   | $ | 211,603 |  
|Clean Fleet                                                 |  |                                            | 68,023  |                                           |   | 55,657  |   |      | 190,660 |   |   | 154,228 |  
|                                                            |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|Total                                                       |  | $                                          | 146,363 |                                           | $ | 109,776 |   | $    | 446,423 |   | $ | 365,831 |  
|                                                            |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|Operating Income:                                           |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|Crude Fleet(2)                                              |  | $                                          | 23,954  |                                           | $ | 20,775  |   | $    | 184,449 |   | $ | 116,497 |  
|Clean Fleet                                                 |  |                                            | 35,650  |                                           |   | 31,070  |   |      | 100,141 |   |   | 82,777  |  
|                                                            |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|                                                            |  |                                            | 59,604  |                                           |   | 51,845  |   |      | 284,590 |   |   | 199,274 |  
|General and administrative expense not allocated to
vessels |  |                                            | (4,735  | )                                         |   | (5,499  | ) |      | (13,316 | ) |   | (14,663 | )
|Other                                                       |  |                                            | 802     |                                           |   | 1,243   |   |      | 1,014   |   |   | 4,864   |  
|                                                            |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  
|Total                                                       |  | $                                          | 55,671  |                                           | $ | 47,589  |   | $    | 272,288 |   | $ | 189,475 |  
|                                                            |  |                                            |         |                                           |   |         |   |      |         |   |   |         |  

|                          |  |  |  |  |  |  |  |                   |           |                  |   |           | 
|------------------------- |  |  |  |  |  |  |  | ----------------- | --------- | ---------------- | - | --------- | 
|(in thousands)            |  |  |  |  |  |  |  | September 30,2006 |           | December 31,2005 |  
|                          |  |  |  |  |  |  |  |                   |           |                  |  
|Identifiable
  Assets:    |  |  |  |  |  |  |  |                   |           |                  |   |           | 
|Crude Fleet               |  |  |  |  |  |  |  | $                 | 480,200   |                  | $ | 676,186   | 
|Clean Fleet               |  |  |  |  |  |  |  |                   | 995,492   |                  |   | 981,068   | 
|                          |  |  |  |  |  |  |  |                   |           |                  |   |           | 
|Subtotal                  |  |  |  |  |  |  |  |                   | 1,475,692 |                  |   | 1,657,254 | 
|Cash and cash equivalents |  |  |  |  |  |  |  |                   | 151,032   |                  |   | 42,297    | 
|Marketable securities     |  |  |  |  |  |  |  |                   | 26,100    |                  |   |          | 
|Other                     |  |  |  |  |  |  |  |                   | 33,245    |                  |   | 28,492    | 
|                          |  |  |  |  |  |  |  |                   |           |                  |   |           | 
|Total                     |  |  |  |  |  |  |  | $                 | 1,686,069 |                  | $ | 1,728,043 | 
|                          |  |  |  |  |  |  |  |                   |           |                  |   |           | 

|    |                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company uses time charter
  equivalent revenue, which is voyage revenue less voyage expenses, as a
  measure of analyzing fluctuations in voyage revenue between financial periods
  and as a method of equating revenue generated from a voyage charter to time
  charter.

The
following is a reconciliation of TCE revenue for the three months ended
September 30, 2006:

|                       |  |               |         |               |   |              |  |   |         | 
|---------------------- |  | ------------- | ------- | ------------- | - | ------------ |  | - | ------- | 
|(in thousands)         |  | Crude
  Fleet |         | Clean
  Fleet |   | Consolidated | 
|                       |  |               |         |               |   |              | 
|Voyage and TC Revenues |  | $             | 104,999 |               | $ | 75,289       |  | $ | 180,288 | 
|Voyage Expenses        |  |               | 26,659  |               |   | 7,266        |  |   | 33,925  | 
|                       |  |               |         |               |   |              |  |   |         | 
|TCE Revenue            |  | $             | 78,340  |               | $ | 68,023       |  | $ | 146,363 | 
|                       |  |               |         |               |   |              |  |   |         | 

The
following is a reconciliation of TCE revenue for the three months ended
September 30, 2005:

|                       |  |               |        |               |   |              |  |   |         | 
|---------------------- |  | ------------- | ------ | ------------- | - | ------------ |  | - | ------- | 
|(in thousands)         |  | Crude
  Fleet |        | Clean
  Fleet |   | Consolidated | 
|                       |  |               |        |               |   |              | 
|Voyage and TC Revenues |  | $             | 79,396 |               | $ | 63,565       |  | $ | 142,961 | 
|Voyage Expenses        |  |               | 25,277 |               |   | 7,908        |  |   | 33,185  | 
|                       |  |               |        |               |   |              |  |   |         | 
|TCE Revenue            |  | $             | 54,119 |               | $ | 55,657       |  | $ | 109,776 | 
|                       |  |               |        |               |   |              |  |   |         | 

18

---



Note 10
 Financial Information Relating to Segments (cont.)

The
following is a reconciliation of TCE revenue for the nine months ended
September 30, 2006:

|                       |  |               |         |               |   |              |  |   |         | 
|---------------------- |  | ------------- | ------- | ------------- | - | ------------ |  | - | ------- | 
|(in thousands)         |  | Crude
  Fleet |         | Clean
  Fleet |   | Consolidated | 
|                       |  |               |         |               |   |              | 
|Voyage and TC Revenues |  | $             | 341,907 |               | $ | 213,393      |  | $ | 555,300 | 
|Voyage Expenses        |  |               | 86,144  |               |   | 22,733       |  |   | 108,877 | 
|                       |  |               |         |               |   |              |  |   |         | 
|TCE Revenue            |  | $             | 255,763 |               | $ | 190,660      |  | $ | 446,423 | 
|                       |  |               |         |               |   |              |  |   |         | 

The
following is a reconciliation of TCE revenue for the nine months ended
September 30, 2005:

|                       |  |               |         |               |   |              |  |   |         | 
|---------------------- |  | ------------- | ------- | ------------- | - | ------------ |  | - | ------- | 
|(in thousands)         |  | Crude
  Fleet |         | Clean
  Fleet |   | Consolidated | 
|                       |  |               |         |               |   |              | 
|Voyage and TC Revenues |  | $             | 283,365 |               | $ | 178,729      |  | $ | 462,094 | 
|Voyage Expenses        |  |               | 71,762  |               |   | 24,501       |  |   | 96,263  | 
|                       |  |               |         |               |   |              |  |   |         | 
|TCE Revenue            |  | $             | 211,603 |               | $ | 154,228      |  | $ | 365,831 | 
|                       |  |               |         |               |   |              |  |   |         | 

|    |                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Operating income for the nine months ended September 30,
  2006 includes Gain on disposal of 3 vessels aggregating $78,038,000.
  Operating income for the nine months ended September 30, 2005 includes Gain
  on disposal of vessels of $2,874,000.

Note 11
- Other Commitments and Contingencies

Long-Term Time Charter
Revenue

The
following table summarizes our time charters entered into in 2006:

|                                        |  |           |  |               |  |                          |  |                                   |         | 
|--------------------------------------- |  | --------- |  | ------------- |  | ------------------------ |  | --------------------------------- | ------- | 
|Vessel                                  |  | Type      |  | Start Date    |  | Length of
  Time Charter |  | Contracted Time
  Charter Revenue |        
|                                        |  |           |  |               |  |                          |  |                                   |        
|                                        |  |           |  |               |  |                          |  | (in thousands)                    |        
|First
  Quarter 2006:                   |  |           |  |               |  |                          |  |                                   |         | 
|                                        |  |           |  |               |  |                          |  |                                   |         | 
|PLATTE                                  |  | Handymax  |  | Jun-06        |  | 3 years                  |  | $                                 | 23,620  | 
|KANSAS                                  |  | Handymax  |  | Apr-06(1)     |  | 3 years                  |  |                                   | 21,630  | 
|REPUBLICAN                              |  | Handymax  |  | May-06(1)     |  | 3 years                  |  |                                   | 21,657  | 
|CAPE BASTIA                             |  | Suezmax   |  | May-06        |  | 3 years                  |  |                                   | 40,507  | 
|ISERE                                   |  | Handysize |  | Sep-06(1),(3) |  | 2 years                  |  |                                   | 12,268  | 
|CHARENTE                                |  | Handysize |  | Sep-06(1)     |  | 2 years                  |  |                                   | 12,189  | 
|                                        |  |           |  |               |  |                          |  |                                   |         | 
|                                        |  |           |  |               |  |                          |  |                                   | 131,871 | 
|Second
  Quarter 2006:                  |  |           |  |               |  |                          |  |                                   |         | 
|                                        |  |           |  |               |  |                          |  |                                   |         | 
|CAPE BONNY                              |  | Suezmax   |  | May-06        |  | 4 years                  |  |                                   | 51,803  | 
|INGEBORG(2)                             |  | Suezmax   |  | Sep-06        |  | 3 years                  |  |                                   | 37,428  | 
|ADAIR(2)                                |  | Suezmax   |  | Sep-06        |  | 3 years                  |  |                                   | 37,428  | 
|                                        |  |           |  |               |  |                          |  |                                   |         | 
|                                        |  |           |  |               |  |                          |  |                                   | 126,659 | 
|Third
  Quarter 2006:                   |  |           |  |               |  |                          |  |                                   |         | 
|                                        |  |           |  |               |  |                          |  |                                   |         | 
|THAMES                                  |  | Handymax  |  | Sep-06        |  | 3 years                  |  |                                   | 9,360   | 
|NECHES                                  |  | Handymax  |  | Oct-07        |  | 3 years                  |  |                                   | 22,121  | 
|                                        |  |           |  |               |  |                          |  |                                   |         | 
|                                        |  |           |  |               |  |                          |  |                                   | 31,481  | 
|                                        |  |           |  |               |  |                          |  |                                   |         | 
|Total
  contracted time charter revenue |  |           |  |               |  |                          |  | $                                 | 290,011 | 
|                                        |  |           |  |               |  |                          |  |                                   |         | 

|    |                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Time charters with profit sharing.                                                                                                                                               
|(2) | Vessels will remain part of the Gemini pool, and we will receive contract revenue over the next three years reflecting pool performance and our ownership allocation in the pool.
|(3) | The RHINE replaced the ISERE on the time charter, see Note
      8.                                                                                                              

Minimum
future revenues (not including profit sharing) to be received for time charters
and synthetic time charter contracts (see Note 3) subsequent to September 30,
2006 are as follows: $81,108,000 in the fourth quarter of 2006, $304,896,000 in
2007, $249,446,000 in 2008, $135,844,000 in 2009, $43,157,000 in 2010 and
$30,470,000 thereafter.

19

---



Note 11
- Other Commitments and Contingencies (cont.)

Vessels
Time Chartered-In and Bareboat Chartered-In

During
2006, we sold and time chartered back 2 vessels, the POTOMAC (renamed the CAPE
BANTRY) and the SOMJIN (renamed the HS ALCINA) and sold and bareboat chartered
back 2 vessels, the OTTAWA and the TAMAR. All of the charters are operating
leases, and all of the vessels have fixed time charter rates except the HS
ALCINA. The HS ALCINAs charter hire expense is the equal to the amount the
vessel earns in the Gemini Pool (i.e. a profit sharing arrangement).

In
September 2006, we also extended the time charter, previously expiring December
2006, for the Max Jacob until December 2009.

Our
future minimum lease payments for vessels under operating leases (not including
options) and office space subsequent to September 30, 2006 are as
follows: $14,483,000 in the fourth quarter of 2006, $61,378,000 in 2007,
$63,079,000 in 2008, $64,527,000 in 2009, $43,893,000 in 2010 and $46,151,000
thereafter.

Other

OMI
and certain subsidiaries are defendants in various actions arising from
shipping operations. Such actions are covered by insurance or, in the opinion
of management, the ultimate resolution of these matters will not have a
material adverse effect on the financial condition, results of operations or
cash flows of the Company. Management accrues an estimate of expense for any
matters that are considered probable of occurring based on the facts and
circumstances.

20

---



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following presentation of managements
discussion and analysis of OMI Corporations (OMI or the Company) financial
condition and results of operations should be read in conjunction with the
condensed consolidated financial statements and accompanying notes appearing
elsewhere in this Form 10-Q.

Overview

Business

OMIs
revenue is derived from our investment in modern vessels used to provide seaborne
transportation services for crude oil and petroleum products in the
international shipping markets. Our customers include major independent and
state-owned oil companies, major oil traders, government entities and various
other entities.

Currently
we own or charter-in a fleet of 47 vessels (45 vessels upon the sale of vessels
agreed to in October). We are focused on maintaining a high quality fleet that
is concentrated primarily in two vessel types: Suezmax tankers (which we refer
to as our crude fleet or Suezmax fleet), which generally carry crude oil
from areas of oil production to refinery areas, and product carriers (which we
refer to as our clean fleet), which generally carry refined petroleum
products, such as gasoline, from refineries to distribution areas. As of
September 30, 2006, the average age of our vessels was 3.3(1) years.

Note
(1): All averages referring to vessel age are weighted averages based on
deadweight tons (dwt) and are calculated as of September 30, 2006, based on
our then operating fleet of 47 vessels. Dwt, expressed in metric tons each of
which is equivalent to 1000 kilograms, refers to the total weight a vessel can
carry when loaded to a particular load line.

Financial Summary

The
third quarter 2006 operating results reflected stronger spot rates in
comparison to the second quarter 2006 and also in comparison to the third
quarter of 2005. Increased rates for vessels on time charter reflect additional
vessels earning profit sharing in 2006, and new time charter contracts at
higher rates that began in 2006. Spot rates were 67% higher and time charter
rates were 19% higher for our Suezmax fleet in the third quarter of 2006
compared to the third quarter 2005. Spot rates were 13% higher and time charter
rates were 6% higher for our clean fleet in the third quarter of 2006 compared
to the third quarter 2005. The Company has prepared for future uncertainty in
rates by contracting approximately 64% of our tonnage on time charters, 37% of
which have profit sharing arrangements. We have also entered into synthetic
time charter contracts for the equivalent of 4 Suezmaxes in the fourth quarter
of 2006 that reduce our spot market exposure for Suezmaxes, and range from a
period of six months to three years. This means that effectively 82% of our
tonnage is economically equivalent to being on fixed rate charter (29% of which
has upside potential through profit sharing).

During
2006, we have entered into various contracts that are strategic to our business,
as follows:

| |   |                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------
| | Ø | We
  contracted for 11 new time charters that will result in contracted revenue of
  approximately $290 million over the next four years.

21

---



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Ø | The
  contracted revenue for the synthetic time charters is $138 million over the next
  three years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | Ø | We have
  taken delivery of 5 product carrier newbuildings, which aggregate
  approximately $198 million in capitalized costs. All of these vessels are
  unencumbered by debt, and operate on time charters as of September 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | Ø | We have sold
  7 vessels; 4 Suezmax vessels (1998-2001 built) and 2 Panamax vessels (2003
  built) for an aggregate of $376.5 million in net proceeds and 1 handysize
  product tanker (1999 built) for $35.2 million, which was delivered to the new
  owners in October 2006. Four of these vessels (2 Panamaxes and 2 Suezmax
  vessel) have been chartered back to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | Ø | In October
  2006, we agreed to sell 4 product carriers for a sales price aggregating
  approximately $180 million. Two of the vessels, the RUBY and the GANGES, will
  be chartered back to OMI, and the gain on sales of approximately $12 million
  for the RUBY (expected to be delivered in the fourth quarter of 2006) and $19
  million for the GANGES (expected to be delivered in the first quarter of
  2007), will be amortized over the time charter (operating lease) period of
  three years. Upon the sale of the other two vessels, the gain on the disposal
  of the MARNE of approximately $17 million will be recognized upon delivery
  (expected to be in the fourth quarter of 2006) and the gain on sale of the
  ASHLEY of approximately $16 million will be realized upon delivery (expected
  to be in the first quarter of 2007).

Additionally,
we continue to be active in our stock repurchase program. The Board approved
three repurchase programs in 2006 (February, April and September), authorizing
an aggregate of $210 million for the repurchase of common stock. This year,
through November 6, 2006, we have repurchased 9.0 million shares for
approximately $181.4 million. Since January 1, 2005, we have repurchased an
aggregate of 24.0 million shares of common stock for approximately $451.3
million or an average of $18.79 per share. Refer to the table below for number
of shares outstanding.

The
following table illustrates financial highlights for the three and nine months
ended September 30, 2006 and September 30, 2005:

22

---



|                                                   |  |                                         |         |      |   |                  |  |  |      |  
|-------------------------------------------------- |  | --------------------------------------- | ------- | ---- | - | ---------------- |  |  | ---- | -
|Highlights                                         |  | 2006                                    |         | 2005 |   | Percent
  Change | 
|                                                   |  |                                         |         |      |   |                  | 
|                                                   |  | (in
millions, except per share amounts) |        
|For the
  Three                                    |  |                                         |         |      |   |                  |  |  |      |  
|Months
  Ended September 30:                       |  |                                         |         |      |   |                  |  |  |      |  
|                                                   |  |                                         |         |      |   |                  |  |  |      |  
|Revenue                                            |  | $                                       | 181.2   |      | $ | 143.2            |  |  | 27   | %
|Net Income                                         |  | $                                       | 49.8    |      | $ | 39.6             |  |  | 26   | %
|Gain on Disposal of Vessels                        |  |                                         |        |      |   |                 |  |  | n/a  |  
|Diluted EPS                                        |  | $                                       | 0.74    |      | $ | 0.49             |  |  | 51   | %
|Dividends Declared Per
  Share                     |  | $                                       | 0.125   |      | $ | 0.08             |  |  | 56   | %
|                                                   |  |                                         |         |      |   |                  |  |  |      |  
|For the
  Nine                                     |  |                                         |         |      |   |                  |  |  |      |  
|Months
  Ended September 30:                       |  |                                         |         |      |   |                  |  |  |      |  
|                                                   |  |                                         |         |      |   |                  |  |  |      |  
|Revenue                                            |  | $                                       | 557.6   |      | $ | 463.1            |  |  | 20   | %
|Net Income                                         |  | $                                       | 245.1   |      | $ | 162.5            |  |  | 51   | %
|Gain on Disposal of Vessels                        |  | $                                       | 78.0    |      | $ | 2.9              |  |  | 2590 | %
|Diluted EPS                                        |  | $                                       | 3.56    |      | $ | 1.94             |  |  | 84   | %
|Dividends Declared Per
  Share                     |  | $                                       | 0.325   |      | $ | 0.24             |  |  | 35   | %
|                                                   |  |                                         |         |      |   |                  |  |  |      |  
|As of
  September 30:                              |  |                                         |         |      |   |                  |  |  |      |  
|                                                   |  |                                         |         |      |   |                  |  |  |      |  
|Shares Outstanding                                 |  |                                         | 66.7    |      |   | 78.6             |  |  | -15  | %
|Cash, Cash Equivalents and
  Marketable Securities |  | $                                       | 177.1   |      | $ | 28.3             |  |  | 526  | %
|Vessels, CIP and Other
Property-Net(1)             |  | $                                       | 1,374.2 |      | $ | 1,574.2          |  |  | -13  | %
|Total Debt                                         |  | $                                       | 651.6   |      | $ | 901.1            |  |  | -28  | %
|                                                   |  |                                         |         |      |   |                  |  |  |      |  
|Future Long-Term Contract
  Revenue                |  | $                                       | 845.0   |      | $ | 524.7            |  |  | 61   | %

|    |                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------
|(1) | At
September 30, 2006 and September 30, 2005, excludes $21.6 million and $82.2
million for Vessels Held for Sale, respectively.

OMIs
basic and diluted earnings per share (EPS) for the three months ended
September 30, 2006 was the highest per share third quarter in the Companys
history.

Revenue
of $181.2 million for the three months ended September 30, 2006 increased $38.0
million or 27% compared to revenue of $143.2 million for the three months ended
September 30, 2005. Revenue of $557.6 million for the nine months ended
September 30, 2006 increased $94.5 million or 20% compared to revenue of $463.1
million for the nine months ended September 30, 2005. The revenue from our
product carriers increased due to more operating days from vessels acquired and
higher rates. The revenue from our Suezmax vessels increased because of higher
rates and profit sharing (see Time Charter Equivalent [TCE] Revenue section).
(Note: Revenue did not fluctuate for Suezmax vessels sold in 2006 because all
vessels sold operate in the Gemini pool.)

Net
Income and EPS increased during the nine months of 2006 primarily from the gain
on disposal of vessels aggregating $78.0 million, which was $75.1 million
higher than the gain on sale of $2.9 million for the nine months in 2005.
Additionally, income increased in both the three and nine months ended
September 30, 2006 due to better financial performance compared to the 2005
periods.

OMIs
financial performance in 2006 resulted from the following key elements of our
business strategy:

|    |                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | concentrate
  in two vessel categories: Suezmax tankers, which offer size advantages (over
  Aframaxes and Panamaxes) and geographic flexibility (over VLCCs), and product
  carriers, which provide an advantage because

23

---



|    |                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | of
  increasing demand for petroleum products in areas where no additional
  refineries have recently been built. Our product carrier sizes allow us to
  participate in most trading areas and over the last few years we have
  accumulated 13 ice class product carriers, further expanding trading
  capabilities;                                                
|    |                                                                                                                                                                                                                                                                                                                                                                       
|(2) | maintain
  high quality vessels and standards of operation through improved
  environmental and safety procedures,* crew training and maintenance and
  repair procedures;                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                       
|(3) | manage the
  balance between the ability to capture upside in stronger spot markets and
  the predictable revenues from long-term contracts, which cover fixed costs
  (currently covered until 2008): vessel and charter hire expenses for vessels
  with time charters and synthetic time charters, corporate general and
  administrative and interest expense; and
|    |                                                                                                                                                                                                                                                                                                                                                                       
|(4) | maintain a
  balance between available liquidity to purchase vessels and/or the Companys
  common stock as market conditions and opportunities arise and maintaining
  prudent financial ratios (e.g., leverage ratio).                                                                                                                                              

|  |                                                                                                                                                                                                                      
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                      
|* | We
  believe our operations comply in all material respects with applicable
  environmental laws. To reduce our exposure, we seek to maintain standards and
  practices to meet or exceed these laws and regulations.

There
are many factors that affect tanker rates, including supply and demand for
vessels and the cargo that the vessels carry (the supply/demand for crude oil
or refined products). Market conditions (see Market Overview section) and
economic and regulatory changes also affect revenues and expenses. The
following are several key drivers for our Revenue and Operating income:

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | spot rates
  in the Suezmax tanker market and product tanker market (including vessels on
  time charters with profit sharing arrangements) and the number of revenue
  earning operating days of our fleet (Note: for the next twelve months, we
  estimate a variation of $1,000 per day for vessels on spot would
  increase/decrease net income by $4.7 million or $0.07 per share, $0.05 per
  share from the clean fleet and $0.02 per share from the Suezmax fleet);
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(2) | marketing
  our vessels by the formation of strategic alliances (better scheduling of
  vessels and positioning, resulting in better utilization);                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(3) | capitalizing
  on our experience and reputation in the industry; and                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(4) | managing
  costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                          

The
Company studies market indicators and trends when making decisions for managing
risks, including but not limited to the following: world oil demand
(increases/decreases in consumption of oil), where the supply to meet the
demand comes from (long-haul versus short-haul voyages), world oil supply by
geographic regions, inventory levels by geographic regions, world tanker
newbuildings (orderbook) and deletions (scrappings and conversions).

Recent Activities

Time Charter Contracts (see Contracted Time Charter Revenue section)

| |   |                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Ø | From January
  to October 2006, OMI entered into 11 time charter contracts, 4 of which have
  profit sharing arrangements, each for approximately a one, two or three year
  period, for 5 handymax product carriers (the KANSAS, REPUBLICAN, PLATTE,
  THAMES and NECHES), 2 handysize product carriers (the ISERE and CHARENTE) and
  4 Suezmax

24

---



| |  |                                                                                                                                                                                                                                                                             
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | vessels (the
  CAPE BASTIA, CAPE BONNY, INGEBORG and ADAIR), which aggregated approximately
  $290 million in contacted revenue, not including any future profit sharing.
  The ADAIR and INGEBORG time charters, which began in August 2006 were done in
  the Gemini Pool.

Synthetic Time Charter Contracts (FFAs)

| |   |                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Ø | We have
  entered into synthetic time charters which will aggregate $138 million in contracted
  revenue from October 1, 2006 through September 2009. The various starting
  dates and terms of these contracts are as follows:
| |   |                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                | In the first
  half of 2006, we entered into 2 three year synthetic time charters (FFA
  contracts) beginning in July 2006 for 11⁄2 Suezmax vessels at $36,000 per day.                                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                | In the third
  quarter of 2006, we entered into 5 synthetic time charters, a three year
  contract for a Suezmax vessel at $37,250 per day beginning in July 2006, a
  six month contract for 1⁄2 Suezmax vessel at $47,500 per day beginning in
  July 2006, a three year contract for a 1⁄4 Suezmax vessel at $40,000 per
  day beginning in October 2006, and two three year contracts for a 1⁄2 Suezmax
  vessel and a 1⁄4 Suezmax vessel at $40,250 per day, beginning in October
  2006.

Increases
in Operating Fleet by Five Newbuildings

| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Ø | In January, February, March and
May 2006, 5 product carrier newbuildings, 4 handymax (the WABASH, the KANSAS,
REPUBLICAN and the PLATTE) and 1 handysize (the RHINE) were delivered, which
completed our newbuilding program.

Disposition
of Vessels

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Ø | In March
  2006, OMI sold and bareboat chartered back 2 Panamax product carriers, the
  OTTAWA and the TAMAR, for approximately $89.6 million. Both vessels were
  delivered on March 27, 2006 and were chartered-in for approximately four
  years. The resulting gain on the sales of approximately $20.4 million was
  recorded to Deferred gain on sales of vessels and are being amortized over
  the four year period.                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Ø | In April
  2006, OMI sold a Suezmax tanker, the POTOMAC, for approximately $72.5
  million. The vessel was renamed the CAPE BANTRY and was time chartered back
  to OMI for five years. The resulting gain on the sale of approximately $26.5
  million was recorded to Deferred gain on sale of vessel and are being
  amortized over the five year term of the time charter. The DELAWARE replaced
  the POTOMAC on its time charter that expires May 2012.    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Ø | In April,
  May and June 2006, OMI sold three Suezmax tankers, the SACRAMENTO, HUDSON and
  SOMJIN, for approximately $214.5 million. The gain on the sale of vessels
  recognized during the third quarter was approximately $78 million. The
  SOMJIN, renamed the HS ALCINA, was chartered back by OMI for three years. The
  charter hire expense is equal the vessels earnings in the Gemini Pool. The
  other two vessels also operate in the Gemini Pool.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Ø | In October
  2006, OMI sold a handysize product carrier, the ISERE, for approximately
  $35.2 million. The vessel was held
  for sale at September 30, 2006 and the gain of approximately $13 million is
  being                                                                                                                                                                                                                                                 

25

---



| |  |                                                                                                           
| |  | ----------------------------------------------------------------------------------------------------------
| |  | recognized in the fourth quarter. The RHINE replaced
  the ISERE on the time charter that expires in 2008.

Our Fleet

OMIs
fleet currently comprises 47 vessels aggregating approximately 3.5 million dwt.
It includes 13 Suezmaxes, not including the 7 Suezmax vessels in the Gemini
pool owned by other pool members, 17 handysize and 15 handymax product carriers
and 2 Panamax product carriers. Eight vessels are chartered in; 6 of the
Suezmax tankers are time chartered-in and 2 product carriers are bareboat
chartered-in.

The
following table of OMIs current fleet includes wholly-owned and chartered-in
vessels by segment and type and aggregate dwt:

|                                                      |  |                     |    |     |  |           | 
|----------------------------------------------------- |  | ------------------- | -- | --- |  | --------- | 
|                                                      |  | Number
  of Vessels |    | Dwt | 
|                                                      |  |                     |    |     | 
|Crude Fleet:                                          |  |                     |    |     |  |           | 
|                                                      |  |                     |    |     |  |           | 
|                                                      |  |                     |    |     |  |           | 
|2002-2004
  built owned Suezmax vessels               |  |                     | 7  |     |  | 1,126,878 | 
|1999-2005
built time chartered-in Suezmax vessels (a) |  |                     | 6  |     |  | 953,054   | 
|                                                      |  |                     |    |     |  |           | 
|Total                                                 |  |                     | 13 |     |  | 2,079,932 | 
|                                                      |  |                     |    |     |  |           | 
|                                                      |  |                     |    |     |  |           | 
|Product Carrier (Clean) Fleet:                      |  |                     |    |     |  |           | 
|                                                      |  |                     |    |     |  |           | 
|                                                      |  |                     |    |     |  |           | 
|2000-2006
  built handymax vessels                    |  |                     | 15 |     |  | 704,669   | 
|1999-2006
  built handysize vessels                   |  |                     | 17 |     |  | 624,677   | 
|2003 built
bareboat chartered-in Panamax vessels (b)  |  |                     | 2  |     |  | 140,659   | 
|                                                      |  |                     |    |     |  |           | 
|Total                                                 |  |                     | 34 |     |  | 1,470,005 | 
|                                                      |  |                     |    |     |  |           | 
|Total Fleet                                           |  |                     | 47 |     |  | 3,549,937 | 
|                                                      |  |                     |    |     |  |           | 

|    |                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Time charter-in contracts
for Suezmaxes expire as follow: MAX JACOB, December 2009; OLIVER JACOB,
September 2010; HS ALCINA, June 2011; CAPE BANTRY, September 2011 CAPE
BASTIA, June 2012; CAPE BONNY, September 2012.
|(b) | Bareboat charter-in
contracts for product carriers expire as follow: OTTAWA, April 2010 and
TAMAR, July 2010.                                                                                                          

MARKET OVERVIEW

Suezmax Tanker Overview

The
tanker market continued at a very profitable level in the third quarter of
2006, notwithstanding an increase in the world tanker fleet. The average spot
TCE rate for Suezmax tankers in the West Africa to U.S. trade was higher than
the preceding quarter and was substantially higher than the rate prevailing in
the same period of last year. This was the result of continued world oil demand
growth and high OPEC oil production. Freight rates in the crude oil tanker
market have continued at high levels thus far in the fourth quarter of 2006.

The
average OPEC oil production in the third quarter of 2006 totaled about 30.1
million barrels per day (b/d), about 0.5 million b/d higher compared to
the preceding quarter and marginally above the level prevailing in the same
quarter of last year. At the same time, the average oil output by the long haul
Middle East oil producers was 0.5 and 0.4 million b/d higher than the preceding
quarter and the same quarter of last year. Recently, in an attempt to reverse a
decrease in oil prices, OPEC decided to cut oil production by 1.2 million b/d
beginning on November 1, 2006.

26

---



World
oil demand in the third quarter of 2006 was 1.4 million b/d higher than the
preceding quarter and averaged about 1.3 million b/d higher compared to the
same period of last year due to increasing world economic activity.  World
oil demand is expected to increase further in the foreseeable future, mainly as
a result of the usual seasonal oil demand gains in the winter months and further
improvement of world economic activity.

Hurricane
activity in the fall of 2005 resulted in shutdowns of most of the U.S. crude
oil production and refinery capacity in the Gulf of Mexico. It is estimated
that about 0.2 million b/d of refinery capacity and 0.1 million b/d of crude
oil production was out of service at the end of the third quarter of 2006.  The refinery capacity is expected to be
fully restored sometime in the first half of next year, though the shut-in
crude oil production will be permanently lost.

OPEC Crude Oil Production and Suezmax Tanker Earnings 0 20 40 60 80 100 120 3Q94 3Q95 3Q96 3Q97 3Q98 3Q99 3Q00 3Q01 3Q02 3Q03 3Q04 3Q05 3Q06 Quarters 22 23 24 25 26 27 28 29 30 Suezmax Bonny (West Africa)-Philadelphia voyage for 1990/1991 built vessels in 1990-1996 period, and modern vessels beginning 1997 OPEC Crude Oil Production Daily Earnings ($ 000) Million barrels per day


Note: As of
9/30/06
Source: Industry Sources


Total
preliminary commercial crude oil and petroleum products inventories in the
United States, Western Europe and Japan at the end of September 2006 were about
81 million barrels, or 3.7% higher than the year earlier level, and 4.5% above
the average of the last five years. At the same time, crude oil inventories
were 6.3% and petroleum products inventories were 3.6% higher than the average
of the last five years, respectively.

27

---



U.S., W. Europe and Japan Crude Oil Inventories 640 660 680 700 720 740 760 780 800 2002 2003 2004 2005 2006 U.S., W. Europe, and Japan Crude Oil Inventories Last 5yrs Average of Crude Oil Inventories in the U.S., W. Europe, and Japan Note: Inventory figures as of end of September of each year. Source: Industry Sources Million Barrels


The
world tanker fleet totaled 341.6 million dwt at the end of the third quarter of
2006, up by about 16.2 million dwt or 5.0% from the year-end 2005 level. The
total tanker fleet includes 45.3 million dwt Suezmaxes, excluding shuttle and
U.S. flag Suezmaxes, up by 6.3% from the year-end 2005 level.


The
tanker orderbook totaled about 121.4 million dwt, or 35.5% of the existing
fleet at the end of September 2006. Approximately 5.8 million dwt are for
delivery in 2006, 29.5 million dwt in 2007, 36.0 million dwt in 2008, 40.2
million dwt in 2009, and most of the balance in 2010.

The
tanker orderbook includes 99 Suezmaxes of about 15.7 million dwt or 34.7% of
the existing internationally trading Suezmax tanker fleet. Two Suezmaxes are
for delivery in 2006, 26 in 2007, 22 in 2008, 47 in 2009 and the balance in
2010. The Suezmax orderbook for delivery in the next few years represents
vessels to replace old tonnage affected by IMO regulations as well as to
satisfy an expected increase in demand. It should be noted that more trades
suitable for Suezmaxes are developing and that Suezmax tankers are flexible
vessels since they are traded effectively in medium and long haul trades.

At
the end of the third quarter of 2006, approximately 31.7 million dwt or 9.3% of
the total tanker fleet was 20 or more years old, including 10.8 million dwt or
3.2% of the fleet which was 25 or more years old. Furthermore, six Suezmaxes
were 20 or more years old, including one which was 25 or more years old. Tanker
sales for scrap and for Floating Production Storage Offloading (FPSO)
conversion totaled about 3.3 million dwt in the first three quarters of 2006,
including one VLCC and seven Suezmaxes of which three were U.S. flag and two
were shuttle tankers.

Product
Tanker Overview

Freight
rates in the product tanker market continued at high levels in the third
quarter of 2006, and the average spot TCE for handysize product tankers in the
Caribbean was higher than the preceding quarter rate and the rate prevailing in
the same period of last year. The product tanker market

28

---



strength was
the result of continuous growth in the demand for oil, shortage of refinery
capacity in consuming areas and still some loss of U.S. refinery capacity in
the Gulf of Mexico due to hurricane activity last fall, notwithstanding an
increase of the world product tanker fleet. Freight rates in the product tanker
market have continued at high levels thus far in the fourth quarter of 2006.

The
world product tanker fleet, (which ranges from small 10,000 dwt product
carriers to larger than 100,000 dwt for coated Aframax tankers) totaled about
81.8 million dwt at the end of September 2006, up by about 9.1% from the
year-end 2005 level. The total product tanker fleet includes about 45.2 million
dwt handysize and handymax product tankers, up by 7.4% from the year-end 2005
level.

The
product tanker orderbook for delivery over the next few years totaled about
39.7 million dwt, or about 48.5% of the existing product tanker fleet at the
end of September 2006. Approximately 3.6 million dwt are for delivery in 2006,
10.8 million dwt in 2007, 13.1 million dwt in 2008 and most of the balance in
2009. At the end of September 2006, approximately 14.2 million dwt or 17.4% of
the existing fleet was 20 or more years old.

The
orderbook for handysize and handymax product tankers at the end of September
2006 totaled about 15.1 million dwt or 33.4% of the existing handysize and
handymax product tanker fleet. Approximately 1.3 million dwt are for delivery
in 2006, 5.1 million dwt in 2007, 5.2 million dwt in 2008 and most of the
balance in 2009.

Total
preliminary commercial inventories of oil products in the United States,
Western Europe and Japan at the end of September 2006 were 59 million barrels
or 4.1% higher than the same time a year ago, and 3.6% above the average of the
last five years. At the same time, inventories of middle distillates, the
seasonal product, in these areas were 5.6% and 4.9% higher than last year and
the last five years average, respectively.

U.S., W. Europe and Japan Product Inventories 1360 1380 1400 1420 1440 1460 1480 1500 2002 2003 2004 2005 2006 U.S., W. Europe, and Japan Product Inventories Last 5yrs Average of Product Inventories in the U.S., W. Europe, and Japan Note: Inventory figures as of end of September of each year. Source: Industry Sources MillionBarrels


The
tanker market is expected to benefit in the foreseeable future as a result of
improving world economic activity, seasonably higher world oil


29

---



demand in the winter months, shortage of refinery
capacity in the United States, Western Europe and Asia, as well as possible
disruptions due to weather and geo-political risks.

Critical
Accounting Estimates

For
a discussion of the Companys critical accounting estimates, see Item 7.
Managements Discussion and Analysis of Financial Condition and Results of
Operations in the Companys Annual Report on Form 10-K for the fiscal year
ended December 31, 2005. Management believes there have been no changes during
the nine months ended September 30, 2006 to the items that the Company
disclosed as its critical accounting estimates as of December 31, 2005.

Results of Operations for the Three and Nine Months Ended
September 30, 2006 Compared to the Three and Nine Months Ended September 30,
2005

The
following table summarizes our results of operations for the three and nine
months ended September 30, 2006 compared to the three and nine months ended
September 30, 2005:

RESULTS
OF OPERATIONS

|                                          |  |                                            |       |                                           |   |       |   |      |       |   |   |       |  
|----------------------------------------- |  | ------------------------------------------ | ----- | ----------------------------------------- | - | ----- | - | ---- | ----- | - | - | ----- | -
|                                          |  | For the Three Months
  Ended September 30, |       | For the Nine Months
  Ended September 30, |  
|(in millions)                             |  | 2006                                       |       | 2005                                      |   | 2006  |   | 2005 |      
|                                          |  |                                            |       |                                           |   |       |   |      |      
|Voyage and time
  charter revenue         |  | $                                          | 180.3 |                                           | $ | 143.0 |   | $    | 555.3 |   | $ | 462.1 |  
|Voyage expense                            |  |                                            | 33.9  |                                           |   | 33.2  |   |      | 108.9 |   |   | 96.3  |  
|                                          |  |                                            |       |                                           |   |       |   |      |       |   |   |       |  
|                                         
|Time charter
  equivalent revenue         |  |                                            | 146.4 |                                           |   | 109.8 |   |      | 446.4 |   |   | 365.8 |  
|Other revenue                             |  |                                            | 0.9   |                                           |   | 0.2   |   |      | 2.3   |   |   | 1.0   |  
|Vessel expense and
  charter hire expense |  |                                            | 68.1  |                                           |   | 37.2  |   |      | 182.8 |   |   | 107.9 |  
|Depreciation and
  amortization           |  |                                            | 15.2  |                                           |   | 17.6  |   |      | 47.0  |   |   | 51.2  |  
|General and
  administrative              |  |                                            | 8.3   |                                           |   | 7.6   |   |      | 24.6  |   |   | 21.1  |  
|Gain on disposal of
  vessels(1),(2)      |  |                                            |      |                                           |   |      |   |      | (78.0 | ) |   | (2.9  | )
|                                          |  |                                            |       |                                           |   |       |   |      |       |   |   |       |  
|Operating income                          |  |                                            | 55.7  |                                           |   | 47.6  |   |      | 272.3 |   |   | 189.5 |  
|                                          |  |                                            |       |                                           |   |       |   |      |       |   |   |       |  
|Gain on purchase of
  Convertible Notes   |  |                                            |      |                                           |   | 2.0   |   |      |      |   |   | 2.8   |  
|Interest expense                          |  |                                            | (9.8  | )                                         |   | (11.0 | ) |      | (32.6 | ) |   | (31.9 | )
|Interest income                           |  |                                            | 1.7   |                                           |   | 0.3   |   |      | 3.3   |   |   | 0.8   |  
|Other(3)                                  |  |                                            | 2.2   |                                           |   | 0.7   |   |      | 2.1   |   |   | 1.3   |  
|                                          |  |                                            |       |                                           |   |       |   |      |       |   |   |       |  
|Net income                                |  | $                                          | 49.8  |                                           | $ | 39.6  |   | $    | 245.1 |   | $ | 162.5 |  
|                                          |  |                                            |       |                                           |   |       |   |      |       |   |   |       |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Gain on disposal of vessels of $78.0 million for the
  nine months ended September 30, 2006 resulted from the sale of 3 Suezmax
  vessels in April, May and June of 2006.                                                                                                                                                                                                                                                                                                                                                                                                                      
|(2) | The Gain on disposal of vessels of $2.9 million for the
  three months ended March 31, 2005, resulted from the sale of 2 non-double
  hull handysize crude oil tankers in January.                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | Other includes realized losses on freight forward
  agreements aggregating $0.3 million for the three months and $0.1 million for
  the nine months ended September 30, 2006 and unrealized gains of $2.3 million
  for the three months and $2.1 million for the nine months ended September 30,
  2006. Realized losses on freight forward agreements aggregating $0.1 million
  for the three months and $0.5 million for the nine months ended September 30,
  2005 and unrealized losses of $0.7 million for the three months and $0.9
  million for the nine months ended September 30, 2005.

30

---



Time Charter Equivalent Revenue

Consistent
with industry practice, we use time charter equivalent, or TCE revenue, which
comprises revenue from vessels operating on time charters (TC) and voyage
revenue less voyage expenses from vessels operating on voyage charters in the
spot market (spot). TCE revenue serves as a measure for analyzing
fluctuations between financial periods and as a method of equating revenue
generated from a voyage charter to time charter revenue. TCE revenue also
serves as an industry standard for measuring revenue and comparing results
among competitors.

A
time charter involves the placing of a vessel at the charterers disposal for a
set period of time during which the charterer may use the vessel in return for
the payment by the charterer of a specified daily or monthly hire rate. Under a
voyage charter in the spot market, the owner of a vessel agrees to provide the
vessel for the transport of specific goods between specific ports in return for
the payment of an agreed upon freight per ton of cargo or, alternatively, for a
specified total amount. All operating costs are for the owners account. We
also have several COAs, which are agreements providing for the transportation
of a specific quantity of cargo over a specific time period but without
designating specific vessels or voyage schedules, thereby allowing flexibility
in scheduling. COAs can either have a fixed rate or a market-related rate. The
majority of our product carriers on spot operate on COAs that have a market
related rate.

OMI
operates vessels on both spot charters and on time charters (TC). As of
September 30, 2006 (excluding the product carrier sold on October 10th),
64% of our tonnage (or 36 vessels, 6 Suezmax vessels and 30 product carriers)
operated on time charters (see Contracted Time Charter Revenue section) and 36%
of our tonnage (or 11 vessels, 7 Suezmax vessels and 4 product carriers)
operated in the spot market. We currently have the equivalent of 4 Suezmax
synthetic time charters (FFA contracts), which reduces our exposure to the spot
market for Suezmaxes from 7 to 3 vessels. Synthetic time charters are similar
to time charters, as they mitigate the risk associated with the spot market
when rates weaken. For the vessels on time charter, we have 63% of our tonnage
(or 21 vessels, 4 Suezmax vessels and 17 product carriers) on fixed rate time
charters and the remaining 37% of our tonnage on time charter (or 15 vessels, 2
Suezmax vessels and 13 product carriers) that operated on time charters with
profit sharing arrangements, giving us the ability to benefit from strong spot
markets. Our time charters with profit sharing arrangements have a floor rate.
If earnings exceed that rate, we share in the profit above that rate equally.
This enables us to benefit from strong tanker markets while protecting our
downside.

Three
Months Ended September 30, 2006 vs. Three Months Ended September 30, 2005

The
following table illustrates TCE revenue earned by vessels by reportable segment
for the three months ended September 30, 2006 compared to the three months ended
September 30, 2005:

|              |  |                                            |       |      |   |        |  |   |      | 
|------------- |  | ------------------------------------------ | ----- | ---- | - | ------ |  | - | ---- | 
|TCE
  Revenue |  | For the Three Months
  Ended September 30, |       |      |   |       
|              |  |                                            |       |      |   |       
|(in millions) |  | 2006                                       |       | 2005 |   | Change | 
|              |  |                                            |       |      |   |        | 
|              |  |                                            |       |      |   |        |  |   |      | 
|Crude
  Fleet |  | $                                          | 78.4  |      | $ | 54.1   |  | $ | 24.3 | 
|Clean
  Fleet |  |                                            | 68.0  |      |   | 55.7   |  |   | 12.3 | 
|              |  |                                            |       |      |   |        |  |   |      | 
|Total         |  | $                                          | 146.4 |      | $ | 109.8  |  | $ | 36.6 | 
|              |  |                                            |       |      |   |        |  |   |      | 

31

---



The
Company earned TCE revenue of $146.4 million for the three months ended
September 30, 2006 compared to $109.8 million for the three months ended
September 30, 2005 increased by $36.6 million or 33% in 2006. Increases in TCE
revenue of $36.6 million comprise increases in the crude fleet of $24.3 million
and increases in the clean fleet of $12.3 million, reflected in the above
table. The increases were the result of higher TCE revenue for vessels on TC
during the 2006 quarter compared to the 2005 quarter. During the three months
ended September 30, 2006, 44% or $63.9 million of our TCE revenue was earned by
vessels operating in the spot market and 56% or $82.5 million of our TCE
revenue was earned by vessels operating on TC compared to the three months
ended September 30, 2005, 61% or $67.2 million of our TCE revenue was earned by
vessels operating in the spot market and 39% or $42.6 million of our TCE
revenue was earned by vessels operating on TC.

The
following table below compares TCE revenue earned by vessels on spot, TCE rates
and Operating days for the three months ended September 30, 2006 to the three
months ended September 30, 2005:

|                                    |  |                                                          |      |                        |   |                                |  |                                        |      |   |  |    |   |  |      |  
|----------------------------------- |  | -------------------------------------------------------- | ---- | ---------------------- | - | ------------------------------ |  | -------------------------------------- | ---- | - |  | -- | - |  | ---- | -
|TCE
  Revenue for
  Vessels on Spot |  | TCE Revenue For the
  Three Months Ended
  September 30, |      |                        |   | Increase (Decrease)
  TCE Rate |  | Increase (Decrease)
  Operating
  Days |     
|                                    |  |                                                          |      | Increase 
  (Decrease) |   |                                | 
|(in millions)                       |  | 2006                                                     |      | 2005                   |   |                                |  |                                       
|                                    |  |                                                          |      |                        |   |                                |  |                                        |      |   | 
|Crude Fleet                         |  | $                                                        | 52.0 |                        | $ | 48.6                           |  | $                                      | 3.4  |   |  | 67 | % |  | (556 | )
|Clean Fleet                         |  |                                                          | 11.9 |                        |   | 18.6                           |  |                                        | (6.7 | ) |  | 13 | % |  | (348 | )
|                                    |  |                                                          |      |                        |   |                                |  |                                        |      |   |  |    |   |  |      |  
|Total                               |  | $                                                        | 63.9 |                        | $ | 67.2                           |  | $                                      | (3.3 | ) |  |    |   |  | (904 | )
|                                    |  |                                                          |      |                        |   |                                |  |                                        |      |   |  |    |   |  |      |  

TCE
revenue of $63.9 million earned by vessels operating in the spot market during
the three months ended September 30, 2006 decreased a net of $3.3 million
compared to TCE revenue of $67.2 million earned by vessels operating in the
spot market during the three months ended September 30, 2005, primarily from
decreases in the clean fleet of $6.7 million. Decreases in TCE revenue of $6.7
million were offset partially by increases of $3.4 million in the crude fleet.

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Ø | Decreases in TCE revenue of $6.7 million earned by
  the vessels in the clean fleet operating on spot charters resulted primarily
  from 348 fewer operating days primarily for vessels that left the spot market
  and began operating on time charter contracts. Decreases were offset
  partially by an increase of 13% in the average daily spot rates for the
  period (see Market Overview section for explanations of rate fluctuations).
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Ø | Increases in TCE revenue of $3.4 million in the
  crude fleet resulted primarily from:                                                                                                                                                                                                                                                                                                                                                          

| |     |                                                                                                                                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------
| | (1) | 67% increase in average daily TCE rate (see Market
  Overview for rate fluctuation explanations),                                   
| |     |                                                                                                                                     
| | (2) | an additional 312 days of revenue earned by 4
  additional non-OMI vessels operating in the Gemini Pool during the 2006
  period and

32

---



| |                                                                                                     |                                                                                                   
| | --------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------
| | (3)                                                                                                 | 226 additional operating days from 3 vessels
  chartered-in (2 in 2005 and 1 in April 2006).      
| |                                                                                                     |                                                                                                   
| | Increases were offset by decreases in TCE revenue
  from 1,094 fewer operating days primarily from:
| |                                                                                                     |                                                                                                   
| |                                                                                                    | 4 vessels sold in 2006,                                                                           
| |                                                                                                    | 2 vessels sold in 2005,                                                                           
| |                                                                                                    | 6 vessels that began time charters and                                                            
| |                                                                                                    | 276 days contracted on synthetic time charters, which
  are included with vessels on time charter.

The
following table below compares TCE revenue earned by vessels on TC, TCE rates
and Operating days for the three months ended September 30, 2006 to the three
months ended September 30, 2005:

|                                  |  |                                                          |      |                     |   |                                |  |                                        |      |  |  |    |   |  |       | 
|--------------------------------- |  | -------------------------------------------------------- | ---- | ------------------- | - | ------------------------------ |  | -------------------------------------- | ---- |  |  | -- | - |  | ----- | 
|TCE
  Revenue for
  Vessels on TC |  | TCE Revenue For the
  Three Months Ended
  September 30, |      | Increase (Decrease) |   | Increase (Decrease)
  TCE Rate |  | Increase (Decrease)
  Operating
  Days |     
|                                  |  |                                                          |      |                     |   |                               
|(in millions)                     |  | 2006                                                     |      | 2005                |   |                                |  |                                       
|                                  |  |                                                          |      |                     |   |                                |  |                                        |      |  | 
|Crude Fleet                       |  | $                                                        | 26.4 |                     | $ | 5.5                            |  | $                                      | 20.9 |  |  | 19 | % |  | 558   | 
|Clean Fleet                       |  |                                                          | 56.1 |                     |   | 37.1                           |  |                                        | 19.0 |  |  | 6  | % |  | 805   | 
|                                  |  |                                                          |      |                     |   |                                |  |                                        |      |  |  |    |   |  |       | 
|Total                             |  | $                                                        | 82.5 |                     | $ | 42.6                           |  | $                                      | 39.9 |  |  |    |   |  | 1,363 | 
|                                  |  |                                                          |      |                     |   |                                |  |                                        |      |  |  |    |   |  |       | 

TCE
revenue of $82.5 million earned by vessels on time charter during the three
months ended September 30, 2006 increased $39.9 million compared to TCE revenue
of $42.6 million earned by vessels on time charter during the three months
ended September 30, 2005. Increases were $20.9 million in the crude fleet and
were $19.0 million in the clean fleet.

|  |                                                                                                                                                                                                             |                                                                                                                                                                              
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Ø | The increase in TCE revenue of $20.9 million earned
  by the crude fleet on time charter resulted primarily from:                                                                                          
|  |                                                                                                                                                                                                            
|  | (1)                                                                                                                                                                                                         | 282 more days in the crude fleet for 4 vessels
  commencing new time charters in 2006 at higher contracted rates and 2 vessels
  that began new time charters in May 2005 and
|  | (2)                                                                                                                                                                                                         | 276 days contracted on synthetic time charters,
  which are included with vessels on time charter.                                                                           
|  |                                                                                                                                                                                                             |                                                                                                                                                                              
|Ø | The increase in TCE revenue of $19.0 million earned
  by the clean fleet on time charter was primarily from revenue earned from 805
  more operating days in 2006 compared to 2005 in the clean fleet from:
|  |                                                                                                                                                                                                            
|  | (1)                                                                                                                                                                                                         | 420 more days for vessels previously operating on
  spot (net of off-hire for vessel drydocks) that were operating on time
  charters in 2006,                               
|  | (2)                                                                                                                                                                                                         | 351 more days for 4 newly acquired vessels in 2006,                                                                                                                          
|  | (3)                                                                                                                                                                                                         | 34 more days for 2 vessels acquired in 2005 and                                                                                                                              
|  | (4)                                                                                                                                                                                                         | an increase in TCE rates by 6% (including $0.6
  million higher profit sharing in the 2006 period) over the 2005 period due to
  new contracts with higher rates.            

Note:
For detailed information of fluctuations by vessel type, see Breakdown by Fleet
sections.

33

---



Nine
Months Ended September 30, 2006 vs. Nine Months Ended September 30, 2005

The
following table illustrates TCE revenue earned by vessels by reportable segment
for the nine months ended September 30, 2006 to the nine months ended September
30, 2005:

|              |  |                                          |       |      |   |        |  |   |      | 
|------------- |  | ---------------------------------------- | ----- | ---- | - | ------ |  | - | ---- | 
|TCE Revenue   |  | For the Nine MonthsEnded
  September 30, |       |      |   |       
|              |  |                                          |       |      |   |        |  |   |      | 
|(in millions) |  | 2006                                     |       | 2005 |   | Change | 
|              |  |                                          |       |      |   |        | 
|              |  |                                          |       |      |   |        |  |   |      | 
|Crude
  Fleet |  | $                                        | 255.8 |      | $ | 211.6  |  | $ | 44.2 | 
|Clean
  Fleet |  |                                          | 190.6 |      |   | 154.2  |  |   | 36.4 | 
|              |  |                                          |       |      |   |        |  |   |      | 
|Total         |  | $                                        | 446.4 |      | $ | 365.8  |  | $ | 80.6 | 
|              |  |                                          |       |      |   |        |  |   |      | 

The
Company earned TCE revenue of $446.4 million for the nine months ended
September 30, 2006 compared to $365.8 million for the nine months ended
September 30, 2005 on increase of $80.6 million or 22%. The increase in TCE
revenue of $80.6 million comprises an increase in the crude fleet of $44.2
million and an increase in the clean fleet of $36.4 million, reflected in the
above table. The increases were the result of higher TCE revenue for vessels on
TC during the nine months ended September 30, 2006 compared to the 2005 period.
During the nine months ended September 30, 2006, 55% or $247.4 million of our
TCE revenue was earned by vessels operating in the spot market and 45% or
$199.0 million of our TCE revenue was earned by vessels operating on TC
compared to the nine months ended September 30, 2005, 73% or $267.1 million of
our TCE revenue was earned by vessels operating in the spot market and 27% or
$98.7 million of our TCE revenue was earned by vessels operating on TC.

The
following table below compares TCE revenue earned by vessels on spot, TCE rates
and Operating days for the nine months ended September 30, 2006 to the nine
months ended September 30, 2005:

|                                     |  |                                                         |       |                       |   |                                |  |                                        |       |   |  |    |   |  |        |  
|------------------------------------ |  | ------------------------------------------------------- | ----- | --------------------- | - | ------------------------------ |  | -------------------------------------- | ----- | - |  | -- | - |  | ------ | -
|TCE
  Revenue for 
  Vessels on Spot |  | TCE Revenue For the
  Nine Months Ended
  September 30, |       | Increase
  (Decrease) |   | Increase (Decrease)
  TCE Rate |  | Increase (Decrease)
  Operating
  Days |      
|                                     |  |                                                         |       |                       |   |                               
|(in millions)                        |  | 2006                                                    |       | 2005                  |   |                                |  |                                       
|                                     |  |                                                         |       |                       |   |                                |  |                                        |       |   | 
|Crude Fleet                          |  | $                                                       | 209.0 |                       | $ | 203.7                          |  | $                                      | 5.3   |   |  | 16 | % |  | (490   | )
|Clean Fleet                          |  |                                                         | 38.4  |                       |   | 63.4                           |  |                                        | (25.0 | ) |  | 7  | % |  | (1,049 | )
|                                     |  |                                                         |       |                       |   |                                |  |                                        |       |   |  |    |   |  |        |  
|Total                                |  | $                                                       | 247.4 |                       | $ | 267.1                          |  | $                                      | (19.7 | ) |  |    |   |  | (1,539 | )
|                                     |  |                                                         |       |                       |   |                                |  |                                        |       |   |  |    |   |  |        |  

TCE
revenue of $247.4 million earned by vessels operating in the spot market during
the nine months ended September 30, 2006 decreased a net of $19.7 million
compared to TCE revenue of $267.1 million earned by vessels operating in the
spot market during the nine months ended September 30, 2005, primarily from
decreases in the clean fleet of $25.0 million. The decreases of $25.0 million
in the clean fleet were offset by increases in TCE revenue in the crude fleet
of $5.3 million for vessels on spot.

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | Ø | Decreases in TCE revenue of $25.0 million earned by
  the vessels in the clean fleet operating on spot charters resulted primarily
  from 1,049 fewer days; 1,251 fewer days primarily for vessels that left the
  spot market and began operating on time charter contracts, offset partially
  by an increase of 202 days from the delivery of a newbuilding in 2006 and a
  7% increase in average daily TCE rates (see Market Overview for fluctuation
  explanations).

34

---



| |   |                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Ø | Increases in TCE revenue of $5.3 million in the
  crude fleet resulted primarily from 16% higher average TCE rates in the 2006
  period over the 2005 period (see Market Overview for fluctuation
  explanations). Although TCE revenue increased during the 2006 period, there
  were 490 fewer days that Suezmax vessels operated on spot charters. We had:
| |   |                                                                                                                                                                                                                                                                                                                                                              
| |   | (1)                                                                                                                                                                                                                                                                                                                                                           | 1,481 fewer days from Suezmax vessels sold (note: 2
  vessels sold are included in the increased days for non-OMI vessels that
  operate in the Gemini Pool) and 6 vessels being placed on time charters (4
  new TC contracts in 2006 and 2 vessels replaced TCs for vessels sold in
  2005), in addition to,
| |   | (2)                                                                                                                                                                                                                                                                                                                                                           | 279 fewer days for an equivalent of 3 Suezmax
  vessels fixed with synthetic time charter contracts, which were offset by;                                                                                                                                                                                    
| |   | (3)                                                                                                                                                                                                                                                                                                                                                           | 933 days more operating days primarily from 4
  additional non-OMI vessels operating in the Gemini Pool and                                                                                                                                                                                                   
| |   | (4)                                                                                                                                                                                                                                                                                                                                                           | 337 more days from 3 vessels chartered-in (1 in 2005
  and 2 in 2006).                                                                                                                                                                                                                                        

The
following table below compares TCE revenue earned by vessels on TC, TCE rates
and Operating days for the nine months ended September 30, 2006 to the nine
months ended September 30, 2005:

|                                  |  |                                                      |       |                       |   |                                  |  |                                          |       |  |  |    |   |  |       | 
|--------------------------------- |  | ---------------------------------------------------- | ----- | --------------------- | - | -------------------------------- |  | ---------------------------------------- | ----- |  |  | -- | - |  | ----- | 
|TCE
  Revenue for
  Vessels on TC |  | TCE RevenueFor the Nine Months
  Ended September 30, |       | Increase
  (Decrease) |   | Increase
  (Decrease)
  TCE Rate |  | Increase
  (Decrease)
  Operating
  Days |      
|                                  |  |                                                      |       |                       |   |                                 
|(in millions)                     |  | 2006                                                 |       | 2005                  |   |                                  |  |                                         
|                                  |  |                                                      |       |                       |   |                                  |  |                                          |       |  | 
|Crude Fleet                       |  | $                                                    | 46.8  |                       | $ | 7.9                              |  | $                                        | 38.9  |  |  | 27 | % |  | 924   | 
|Clean Fleet                       |  |                                                      | 152.2 |                       |   | 90.8                             |  |                                          | 61.4  |  |  | 11 | % |  | 2,601 | 
|                                  |  |                                                      |       |                       |   |                                  |  |                                          |       |  |  |    |   |  |       | 
|Total                             |  | $                                                    | 199.0 |                       | $ | 98.7                             |  | $                                        | 100.3 |  |  |    |   |  | 3,525 | 
|                                  |  |                                                      |       |                       |   |                                  |  |                                          |       |  |  |    |   |  |       | 

TCE
revenue of $199.0 million earned by vessels on time charter during the nine
months ended September 30, 2006 increased $100.3 million compared to TCE
revenue of $98.7 million earned by vessels on time charter during the nine
months ended September 30, 2005. Increases were $38.9 million in the crude
fleet and $61.4 million in the clean fleet.

|  |                                                                                                                                                                         |                                                                                                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Ø | The increase in TCE revenue of $38.9 million earned
  by the crude fleet resulted primarily from increased average daily TCE rate
  by 27% and 924 more operating days:
|  |                                                                                                                                                                        
|  | (1)                                                                                                                                                                     | 429 more days in the crude fleet for 4 vessels
  commencing new time charters in 2006 (new TC contracts with higher fixed
  rates increased the average daily TCE rate in 2006 over 2005),
|  | (2)                                                                                                                                                                     | 273 more days for 2 vessels that began new time
  charters in May 2005,                                                                                                                   
|  | (3)                                                                                                                                                                     | 279 more days for an equivalent of 3 Suezmax vessels
  fixed with synthetic time charter contracts offset by;                                                                             
|  | (4)                                                                                                                                                                     | 57 fewer days for 2 crude carriers sold in 2005 and                                                                                                                                       
|  | (5)                                                                                                                                                                     | increased earnings for profit sharing revenue (also
  reflected in the increased TCE rate in 2006) due to 2 Suezmax vessels first
  year of profit sharing of $4.5 million.               
|  |                                                                                                                                                                         |                                                                                                                                                                                           
|Ø | The increase in TCE revenue of $61.4 million earned
  by the clean fleet was primarily from revenue earned from:                                                       

| |     |                                                                               | 
| | --- | ----------------------------------------------------------------------------- | 
| | (1) | 2,601 more operating days in 2006 compared to 2005
  in the clean fleet from:

35

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| |     |                                                                                                         |                                                                                                                                                    
| | --- | ------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                        | 998 more days for 4 newly acquired vessels in 2006,                                                                                                
| |     |                                                                                                        | 366 more days for 5 vessels acquired in 2005 and                                                                                                   
| |     |                                                                                                        | 1,237 more days for vessels previously operating on
  spot (net of off-hire for vessel drydocks) that were operating on time
  charters in 2006 and
| |     |                                                                                                         |                                                                                                                                                    
| | (2) | increased profit sharing revenue by $2.8 million for
  2 additional clean vessels over the 2005 period.

Note:
For detailed information of fluctuations by vessel type, see Breakdown by Fleet
sections.

Gemini Tankers

Gemini
Tankers (Gemini), a wholly owned subsidiary of OMI, began operating in
December 2003. Gemini is a pool for double hull Suezmax vessels. As of
September 30, 2006, there were 16 Suezmaxes (9 of OMIs and 7 from other
shipowners) operating in the pool. The earnings of the pool are allocated to
the pool members using an agreed upon formula. The gross revenues of Gemini are reflected in OMIs consolidated
revenues, and the charter hire expense for distributions for the other
participants vessels are included in OMIs consolidated charter hire expense.

The
table below provides summary (in millions) information of gross revenues, voyage expense and charter
hire expense for the three and nine months ended September 30, 2006, and
2005 for OMI and non-OMI vessels operating in the Gemini Pool:

|                      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|--------------------- |  | ------------------------------------------- | ---- | ------------------------------------------ | - | ---- |  | ---- | ----- |  | - | ----- | 
|                      |  | For the Three Months 
  Ended September 30, |      | For the Nine Months 
  Ended September 30, |  
|                      |  | 2006                                        |      | 2005                                       |   | 2006 |  | 2005 |      
|                      |  |                                             |      |                                            |   |      |  |      |      
|                      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|Revenue:              |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|OMI Vessels           |  | $                                           | 56.7 |                                            | $ | 57.5 |  | $    | 203.2 |  | $ | 232.6 | 
|Non-OMI Vessels       |  |                                             | 40.5 |                                            |   | 12.1 |  |      | 111.2 |  |   | 40.4  | 
|                      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|                      |  | $                                           | 97.2 |                                            | $ | 69.6 |  | $    | 314.4 |  | $ | 273.0 | 
|                      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|                      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|Voyage Expenses:      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|OMI Vessels           |  | $                                           | 15.2 |                                            | $ | 19.2 |  | $    | 56.6  |  | $ | 59.7  | 
|Non-OMI Vessels       |  |                                             | 11.2 |                                            |   | 4.5  |  |      | 28.2  |  |   | 10.2  | 
|                      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|                      |  | $                                           | 26.4 |                                            | $ | 23.7 |  | $    | 84.8  |  | $ | 69.9  | 
|                      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|                      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|Charter Hire Expense: |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|OMI Vessels           |  | $                                           |     |                                            | $ |     |  | $    |      |  | $ |      | 
|Non-OMI Vessels       |  |                                             | 29.3 |                                            |   | 8.1  |  |      | 78.8  |  |   | 26.9  | 
|                      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 
|                      |  | $                                           | 29.3 |                                            | $ | 8.1  |  | $    | 78.8  |  | $ | 26.9  | 
|                      |  |                                             |      |                                            |   |      |  |      |       |  |   |       | 

Operating Expense

Vessel
expense and charter hire expense- Vessel expense and charter
hire expense of $68.1 million for the three months and $182.8 million for the
nine months ended September 30, 2006 increased $30.9 million and $74.9 million,
respectively, from $37.2 million and $107.9 million for the three and nine
months ended September 30, 2005.

36

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Vessel
expenses -Vessel expense of $23.5 million for the three
months and $67.5 million for the nine months ended September 30, 2006,
increased by $1.8 million and $2.0 million, respectively, compared to $21.7
million for the three months and $65.5 million for the nine months ended
September 30, 2005.

Vessel
expenses include operating expenses such as crew related costs, stores, routine
maintenance and repairs, insurance and miscellaneous. These expenses are a
function of the fleet size, utilization levels for certain expenses,
requirements under laws and by charterers, and our standards.

Vessel
expenses increased $1.8 million or 8% for the three months ended September 30,
2006 compared to the same period in 2005. The product carrier fleet increased
$5.7 million, but the crude fleet decreased $3.9 million. The increase for the
product carriers was mainly due to the acquisition of the 5 vessels during 2006
and 4 vessels during 2005. The decrease for the crude fleet was chiefly as a
result of the disposition of 6 Suezmax vessels sold (4 in 2006 and 2 in 2005).

For
the three months ended September 30, 2006, average daily vessel expense
increased by approximately 7% for the crude fleet and increased approximately
20% for the clean fleet. Increases incurred in the third quarter 2006 crude
fleets average daily vessel expense was primarily related to the timing of the
purchase of stores items (spare parts and supplies) and were within
managements expectations, which is an approximate year over year increase
of 3%. The clean fleets average daily vessel expense was
significantly higher in the third quarter 2006 period because there were lower
operating costs in the first half of 2006 similar to the crude fleet. The
timing of expenses resulted in a greater increase during the quarter; however,
expenses were also within managements expectations (which is an approximate
year over year increase of 10% primarily for additional stores and supplies and
miscellaneous expenses).

Vessel
expenses increased $2.0 million or 3% for the nine months ended September 30,
2006 compared to the same period in 2005, primarily as a result of the vessels
acquired in the clean fleet of $12.3 million offset by primarily a decrease in
the crude fleet vessel expense, as a result of vessels disposed of, explained
above, of approximately $10.3 million.

For
the nine months ended September 30, 2006, the average daily vessel expense
decreased by approximately 9% in the crude fleet and increased approximately 8%
in the clean fleet compared to the same period in 2005. The decrease in the
2006 period in the average daily vessel expense in the crude fleet was the
result of timing, as mentioned above, and we anticipate daily expenses to be
higher in the fourth quarter. The increase in the 2006 periods clean fleet
average daily vessel expense was in line with anticipated increases also
mentioned above.

Charter hire expense
- Charter hire expense is the payment made to the owner of a vessel time
chartered or bareboat chartered for our use. Under a time charter, the owner is
responsible for the vessels operating expenses, in addition to drydock and
capital expenditures. Under a bareboat charter, the charterer is responsible for
the vessels operating expenses, in addition to the cost of the drydock. In a
time or bareboat charter to us, we are responsible for the voyage expenses if
the vessel operates in the spot market. Charter hire expense also includes the
charter hire paid by the pool for the
non-OMI vessels included in the Gemini Pool.

Charter
hire expense increased $29.1 million for the three months and $72.9 million for
the nine months ended September 30, 2006 compared to the

37

---



three and nine months ended September 30, 2005.
Increases for pool charter hire expense relating to Gemini increased $21.2
million in the three months and $51.9 million for the nine months ended
September 30, 2006 compared to the same periods in 2005, resulting from 4
non-OMI owned vessels that were added to the pool, 2 in 2005 and 2 in 2006 (see
discussion of Gemini above). Increases for Charter hire expense for vessels
chartered-in (other than the pool) under operating leases increased $7.9
million in the three months and $21.0 million for the nine months ended
September 30, 2006 compared to the same periods in 2005, primarily as the
result of chartering in 6 additional vessels, 2 in 2005 (the CAPE BASTIA and
the CAPE BONNY) and 4 vessels in 2006 (the 2006 charters resulted from sale leaseback
transactions for the OTTAWA, TAMAR, CAPE BANTRY and HS ALCINA).

Depreciation
and amortization expense- Depreciation and amortization
expense of $15.2 million for the three months and $47.0 million for the nine
months ended September 30, 2006, decreased by $2.4 million in the three months
and $4.2 million in the nine months compared to $17.6 million for the three
months and $51.2 million for the nine months ended September 30, 2005. The
decrease in depreciation expense was primarily due to the disposal of 6 Suezmax
vessels (4 in 2006 and 2 in 2005) and 1 product carrier held for sale from June
to September 2006. Decreases in depreciation expense were partially offset by
additional expense for 9 product carriers acquired (5 in 2006 and 4 in 2005).

General and administrative expense -
General and administrative (G & A)
expenses of $8.3 million for the three months and $24.6 million for the nine
months ended September 30, 2006, increased by $0.7 million in the three months
and $3.5 million in the nine months, respectively, compared to $7.6 million for
the three months and $21.1 million for the nine months ended September 30,
2005. The increase resulted from higher compensation and employee benefits
expense (38% of the increase in compensation and benefits for non-cash expense
from the amortization of restricted stock awards from 2005 and 2006 grants).

Gain
on disposal of vessels During the three and nine months ended
September 30, 2006, gain on disposal of vessels of $78.0 million was recorded,
for the sale of 3 Suezmax vessels in April, May and June of 2006. During the
nine months ended September 30, 2005, a gain on disposal of vessels of $2.9
million was recorded for the sale of two non-double hull crude oil carriers in
January 2005.

Interest Expense

Interest
expense of $9.8 million for the three months and $32.6 million for the nine
months ended September 30, 2006 decreased by $1.2 million in the three months
and increased $0.7 million in the nine months, compared to $11.0 million for
the three months and $31.9 million for the nine months ended September 30,
2005. Interest expense was approximately 11% lower during the three months and
2% higher during the nine months ended September 30, 2006 compared to the same
periods in 2005. Decreases in interest expense were primarily attributed to the
decrease in the average debt outstanding of 28% in the three months and 14% in
the nine months ended September 30, 2006, which was offset partially by the:
(1) the extinguishment of $105.2 million of the 2.875% Convertible Notes in
2005, (2) debt that had lower LIBOR rates in 2005 and that has been fixed via
swaps at higher rates in 2006 and (3) lower capitalized interest in 2006.

38

---



Segment
Information - Detailed Results of Operations

OMIs
segment information is detailed by its two operating segments, its crude fleet
and clean fleet. OMI also manages its performance by category in the tables
that follow.

The
following discussion of Operating Income includes TCE revenue less vessel
expense, charter hire expense and depreciation and amortization, G & A
expenses allocated to vessels and gain/loss on disposal of vessels for the
crude and clean segments.

Crude Fleet Results of Operations

Operating Income increased $3.2 million for the three months and $68 million
for the nine months ended September 30, 2006 compared to the three and nine
months ended September 30, 2005. The net increase in Operating Income during
the three months ended September 30, 2006 was primarily due to higher TCE
revenue from the increase in the average daily TCE rate; 67% increase for spot
charters (see Market Overview and Time Charter Equivalent Revenue sections) and
19% increase for vessels on time charter for new time charters that began in
2006 and profit sharing recorded in 2006, offset partially for increase charter
hire expenses. The net increase in Operating Income during the nine months
ended September 30, 2006 was predominantly from (1) the gain on sale of 3
Suezmax vessels in the second quarter of 2006 of $78.0 million, (2) higher TCE
revenue from a 16% increase in the average daily TCE rate earned for vessels on
spot charters and 27% increase in average daily TCE rates for time charters due
to profit sharing of $4.5 million earned in 2006 and new time charters, (3)
more operating days in the Gemini Pool relating to 4 additional vessels, which
were offset partially by increased Gemini Pool charter hire expense for pool
distributions for the additional vessels and (4) more operating days for
vessels chartered-in in 2005 that were on time charters in 2006, which was
offset partially by additional charter hire expense.

During
2006, OMI entered into contracts for synthetic time charters that commenced in
the third quarter, which reduced our exposure to the spot market. The average
daily TCE rate for the contracted synthetic time charters of approximately
$38,800 a day in the third quarter of 2006 was higher than the average daily
fixed charter hire expense rate for the Suezmaxes that are chartered -in.

The following table illustrates the crude fleet Operating Income by vessel
type, Average Daily TCE, Number of TCE Revenue Days, Average Daily Vessel
Expense and Average Number of OMI Vessels Operated by the crude oil fleet for the three and nine months ended
September 30, 2006 compared to the three and nine months ended September 30,
2005 (Note:
Amounts for some vessels sold include the settlement of certain revenues and
expenses, including insurance claims from prior years):

39

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|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|----------------------------------------------------------------------------------- |  | ------------------------------------------- | ------ | ------------------------------------------ | - | ------ | - | ---- | ------ | - | - | ------ | -
|BREAKDOWN
BY FLEET                                                                  |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|(In Millions, Except Daily
  Rates & Expenses,Number of Vessels and Number of Days) |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|                                                                                    |  | For the Three Months 
  Ended September 30, |        | For the Nine Months 
  Ended September 30, |  
|CRUDE
  FLEET:                                                                      |  | 2006                                        |        | 2005                                       |   | 2006   |   | 2005 |       
|                                                                                    |  |                                             |        |                                            |   |        |   |      |       
|Suezmaxes - On Spot and Time
  Charter:                                             |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|TCE Revenue(1)                                                                      |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Suezmaxes - On Spot(2)                                                              |  | $                                           | 52.0   |                                            | $ | 48.6   |   | $    | 209.0  |   | $ | 202.8  |  
|Suezmaxes - On Time
Charter(2)                                                      |  |                                             | 26.4   |                                            |   | 5.5    |   |      | 46.8   |   |   | 7.9    |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Total TCE Revenue                                                                   |  |                                             | 78.4   |                                            |   | 54.1   |   |      | 255.8  |   |   | 210.7  |  
|Vessel Expense                                                                      |  |                                             | 4.9    |                                            |   | 8.5    |   |      | 15.4   |   |   | 24.9   |  
|Charter Hire Expense:                                                               |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Gemini Pool Charter Hire Expense                                                    |  |                                             | 28.6   |                                            |   | 8.1    |   |      | 77.0   |   |   | 27.0   |  
|Non-Gemini Charter Hire Expense                                                     |  |                                             | 14.2   |                                            |   | 7.3    |   |      | 34.3   |   |   | 15.5   |  
|Depreciation and Amortization                                                       |  |                                             | 4.6    |                                            |   | 7.8    |   |      | 15.6   |   |   | 23.8   |  
|G&A Allocated to Vessels                                                            |  |                                             | 2.1    |                                            |   | 1.9    |   |      | 7.1    |   |   | 6.9    |  
|Gain on Disposal of Vessels(3)                                                      |  |                                             |       |                                            |   |       |   |      | (78.0  | ) |   |       |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Operating Income                                                                    |  | $                                           | 24.0   |                                            | $ | 20.5   |   | $    | 184.4  |   | $ | 112.6  |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Suezmaxes - On Spot:                                                                |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Average Daily TCE                                                                   |  | $                                           | 52,356 |                                            | $ | 31,419 |   | $    | 52,120 |   | $ | 45,085 |  
|Number of OMI TCE Revenue Days(4)                                                   |  |                                             | 418    |                                            |   | 1,285  |   |      | 2,452  |   |   | 3,874  |  
|Number of Pool Member TCE Revenue
Days(1)                                           |  |                                             | 575    |                                            |   | 263    |   |      | 1,558  |   |   | 625    |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Suezmaxes - On Time Charter:                                                        |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Average Daily TCE                                                                   |  | $                                           | 35,501 |                                            | $ | 29,803 |   | $    | 37,555 |   | $ | 29,667 |  
|Number of TCE Revenue Days(5)                                                       |  |                                             | 742    |                                            |   | 184    |   |      | 1,246  |   |   | 265    |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Suezmaxes - On Spot and Time Charter:                                               |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Average Daily Vessel Expense                                                        |  | $                                           | 7,564  |                                            | $ | 7,073  |   | $    | 6,399  |   | $ | 7,026  |  
|Average Daily Non-Gemini Charter Hire Expense                                       |  | $                                           | 27,614 |                                            | $ | 25,386 |   | $    | 26,240 |   | $ | 23,455 |  
|Average Number of Wholly Owned Vessels                                              |  |                                             | 7.0    |                                            |   | 13.0   |   |      | 8.8    |   |   | 13.0   |  
|Average Number of Chartered-In Vessels                                              |  |                                             | 5.6    |                                            |   | 3.2    |   |      | 4.8    |   |   | 3.1    |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Crude Carriers Sold in Prior
Years:(6)                                              |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|TCE Revenue                                                                         |  | $                                           |       |                                            | $ |       |   | $    |       |   |   | 0.9    |  
|Vessel Expense                                                                      |  |                                             |       |                                            |   | (0.3   | ) |      | (0.1   | ) |   | (0.1   | )
|Depreciation and Amortization                                                       |  |                                             |       |                                            |   |       |   |      |       |   |   |       |  
|Gain on Disposal of Vessels                                                         |  |                                             |       |                                            |   |       |   |      |       |   |   | (2.9   | )
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Operating Income                                                                    |  | $                                           |       |                                            | $ | 0.3    |   | $    | 0.1    |   | $ | 3.9    |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Average Daily TCE                                                                   |  |                                             | n/a    |                                            |   | n/a    |   |      | n/a    |   | $ | 16,294 |  
|Number of TCE Revenue Days                                                          |  |                                             | n/a    |                                            |   | n/a    |   |      | n/a    |   |   | 57     |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  
|Total Operating Income                                                              |  | $                                           | 24.0   |                                            | $ | 20.8   |   | $    | 184.5  |   | $ | 116.5  |  
|                                                                                    |  |                                             |        |                                            |   |        |   |      |        |   |   |        |  

Note: Number of
operating or TCE revenue days used to compute Average Daily TCE includes waiting
days and is reduced only for the days the vessels are out of service due to
drydock. Average Daily Vessel Expenses are computed using the number of days in
the period which OMI owned the vessel.

|    |                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Consistent with general practice in the tanker shipping
  industry, we use TCE revenue (defined as voyage and time charter revenues
  less voyage expenses) as a measure of equating revenue generated from a
  voyage charter to revenue generated

40

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | from a time charter. TCE revenue, a non-GAAP measure, provides
  additional meaningful information in conjunction with Revenues, the most
  directly comparable GAAP measure because it assists us in making operating
  decisions about the deployment of our vessels and their performance. Voyage
  expenses comprise all expenses relating to particular voyages, including
  bunker fuel expenses, port fees, canal tolls and brokerage commissions. Under
  time-charter contracts the charterer pays the voyage expenses (except
  brokerage commissions), whereas under voyage charter contracts the shipowner
  pays the voyage expenses. TCE Revenue and
  Expenses includes revenue and expense generated by the Gemini Suezmax Pool.
  As of September 30, 2006, the Suezmax pool included 9 of OMIs Suezmaxes and
  7 Suezmaxes owned by other pool members. As of September 30, 2005, the
  Suezmax pool included 13 of OMIs Suezmaxes and 3 Suezmaxes owned by another
  pool member (see Note (3) below).
|(2) | The
  portion (equivalent to 3 Suezmax vessels in the third quarter of 2006) of
  contracted synthetic TC revenue related to vessels on spot is reflected as
  time charter revenue for Suezmaxes in the above table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(3) | The gain
  of $78.0 million was from the sale of the 3 Suezmaxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(4) | In April,
  May and June 2006, 4 vessels (2 of which were sold and time chartered back in
  April and August) were disposed of. The 2 vessels not chartered back continue
  to operate in the Gemini Pool by the new owners. In November 2005, 2 vessels
  were disposed of.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(5) | During
  March and May 2006, 3 vessels began three and four year time charters,
  respectively, and in August 2006 2 vessels began three year time charters.
  During May 2005, 2 vessels began operating on seven year time charters with
  profit sharing. During November 2005, 1 of the Suezmax vessels was sold and a
  vessel previously operating in Gemini replaced that vessel in its time
  charter contract. During the nine months ended September 30, 2006, OMI
  recognized profit sharing revenue of approximately $4.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(6) | In
  January 2005, 2 handysize crude oil carriers were sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Clean Fleet Results of Operations

Operating
Income increased $4.6 million for the three months and $17.3 million for the
nine months ended September 30, 2006 compared to the three and nine months
ended September 30, 2005. The increases in Operating Income in both the three
and nine months 2006 periods were primarily attributable to increased number of
operating days resulting from 5 vessels acquired in 2005 and 4 vessels in 2006
increasing operating days in 2006. In addition, average daily TCE rates for
spot charters (see Market overview and Time Charter Equivalent Revenue
sections), time charters in 2006 for new or renewed contract rates, and profit
sharing earned in the 2006 periods increased.

The
following table illustrates the clean fleet Operating Income by vessel type,
Average Daily TCE, Number of TCE Revenue Days, Average Daily Vessel Expense and
Average Number of OMI Vessels operated by the clean fleet for the three and nine months ended
September 30, 2006 compared to the three and nine months ended September 30,
2005 (Note:
Amounts for certain vessels sold include the settlement of certain revenues and
expenses):

41

---



|                                                                                    |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|----------------------------------------------------------------------------------- |  | ---------------------------------------- | ------ | --------------------------------------- | - | ------ |  | ---- | ------ |  | - | ------ | 
|BREAKDOWN
BY FLEET                                                                  |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|(In Millions, Except Daily
  Rates & Expenses,Number of Vessels and Number of Days) |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|                                                                                    |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|                                                                                    |  | For the Three Months Ended September 30, |        | For the Nine Months Ended September 30, |  
|CLEAN
  FLEET:                                                                      |  | 2006                                     |        | 2005                                    |   | 2006   |  | 2005 |       
|                                                                                    |  |                                          |        |                                         |   |        |  |      |       
|Products - On Time and Spot Charter:                                                |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|TCE Revenue:(1)                                                                     |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|Products - On Time
Charter(2)                                                       |  | $                                        | 56.1   |                                         | $ | 37.1   |  | $    | 152.2  |  | $ | 90.8   | 
|Products - On Spot                                                                  |  |                                          | 11.9   |                                         |   | 18.6   |  |      | 38.4   |  |   | 63.4   | 
|                                                                                    |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|                                                                                    |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|Total TCE Revenue                                                                   |  |                                          | 68.0   |                                         |   | 55.7   |  |      | 190.6  |  |   | 154.2  | 
|Vessel Expense                                                                      |  |                                          | 19.4   |                                         |   | 13.7   |  |      | 53.2   |  |   | 40.9   | 
|Charter Hire Expense(3)                                                             |  |                                          | 1.1    |                                         |   |       |  |      | 2.1    |  |   |       | 
|                                                                                   
|Depreciation and Amortization                                                       |  |                                          | 10.4   |                                         |   | 9.7    |  |      | 30.9   |  |   | 27.1   | 
|G&A Allocated to Vessels                                                            |  |                                          | 1.4    |                                         |   | 1.2    |  |      | 4.3    |  |   | 3.4    | 
|                                                                                    |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|Operating Income                                                                    |  | $                                        | 35.7   |                                         | $ | 31.1   |  | $    | 100.1  |  | $ | 82.8   | 
|                                                                                    |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|                                                                                    |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|Products - On Time Charter:                                                         |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|Average Daily TCE                                                                   |  | $                                        | 20,725 |                                         | $ | 19,487 |  | $    | 19,675 |  | $ | 17,688 | 
|Number of TCE Revenue Days                                                          |  |                                          | 2,707  |                                         |   | 1,902  |  |      | 7,739  |  |   | 5,138  | 
|                                                                                    |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|Products - On Spot:                                                                 |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|Average Daily TCE                                                                   |  | $                                        | 26,353 |                                         | $ | 23,241 |  | $    | 28,315 |  | $ | 26,341 | 
|Number of TCE Revenue Days                                                          |  |                                          | 452    |                                         |   | 800    |  |      | 1,356  |  |   | 2,405  | 
|                                                                                    |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|Products - On Time and Spot Charter:                                                |  |                                          |        |                                         |   |        |  |      |        |  |   |        | 
|Average Daily Vessel Expense                                                        |  | $                                        | 6,027  |                                         | $ | 5,010  |  | $    | 5,780  |  | $ | 5,367  | 
|Average Daily Charter Hire Expense                                                  |  | $                                        | 5,772  |                                         | $ |       |  | $    | 5,681  |  | $ |       | 
|Average Number of Wholly Owned Vessels and Vessel Bareboat
  Chartered-In(3)        |  |                                          | 35.0   |                                         |   | 29.5   |  |      | 33.7   |  |   | 27.7   | 

Note: Number of
Operating or TCE Revenue Days used to compute Average Daily TCE includes
waiting days and is reduced only for the days the vessels are out of service
due to drydock. Average Daily Vessel Expenses are computed using the number of
days in the period which OMI owned the vessel.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Consistent with general practice in the tanker shipping
  industry, we use TCE revenue (defined as voyage and time charter revenues
  less voyage expenses) as a measure of equating revenue generated from a
  voyage charter to revenue generated from a time charter. TCE revenue, a non-GAAP measure, provides
  additional meaningful information in conjunction with Revenues, the most
  directly comparable GAAP measure because it assists us in making operating
  decisions about the deployment of our vessels and their performance. Voyage
  expenses comprise all expenses relating to particular voyages, including
  bunker fuel expenses, port fees, canal tolls and brokerage commissions. Under
  time-charter contracts the charterer pays the voyage expenses (except
  brokerage commissions), whereas under voyage charter contracts the shipowner
  pays the voyage expenses.
|(2) | During
  the three and nine months ended September 30, 2006, OMI recognized profit
  sharing revenue of approximately $8.8 million and $17.6 million,
  respectively, compared to $8.1 million and $14.7 million for the three and
  nine months ended September 30, 2005, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(3) | In
  January, February, March and May 2006, 4 handymax and one handysize product
  carriers were acquired. In January, March, May and July 2005, 2 handymax and
  3 handysize product carriers were acquired. In March 2006, 2 Panamax vessels
  were sold and leased back (operating lease) on a bareboat charter
  arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

42

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Financial Condition and Capital
Resources

Liquidity

Cash
Flows

The
following were the net changes in Operating, Investing and Financing Activities
for the nine months ended September 30, 2006 and September 30, 2005:

|                                                         |  |                                           |        |      |   |        |   |   |        |  
|-------------------------------------------------------- |  | ----------------------------------------- | ------ | ---- | - | ------ | - | - | ------ | -
|Condensed Consolidated Cash Flows                        |  | For
  the Nine Months Ended September 30, |        |      |   |       
|(in millions)                                            |  | 2006                                      |        | 2005 |   | Change |  
|                                                         |  |                                           |        |      |   |        |  
|                                                         |  |                                           |        |      |   |        |   |   |        |  
|Provided (used)
  by:                                    |  |                                           |        |      |   |        |   |   |        |  
|Operating
  Activities                                   |  | $                                         | 247.4  |      | $ | 241.5  |   | $ | 5.9    |  
|Investing
  Activities                                   |  |                                           | 227.2  |      |   | (93.5  | ) |   | 320.7  |  
|Financing
  Activities                                   |  |                                           | (365.9 | )    |   | (161.5 | ) |   | (204.4 | )
|                                                         |  |                                           |        |      |   |        |   |   |        |  
|Net Increase
  (Decrease) in Cash and Cash Equivalents   |  |                                           | 108.7  |      |   | (13.5  | ) |   | 122.2  |  
|Cash and Cash
  Equivalents at the Beginning of the Year |  |                                           | 42.3   |      |   | 41.8   |   |   | 0.5    |  
|                                                         |  |                                           |        |      |   |        |   |   |        |  
|Cash and Cash
  Equivalents at the End of the Period     |  | $                                         | 151.0  |      | $ | 28.3   |   | $ | 122.7  |  
|                                                         |  |                                           |        |      |   |        |   |   |        |  

The
primary components of working capital are Cash and cash equivalents (Cash),
Marketable securities, Traffic receivables, Vessel held for sale and Other
prepaid expenses and current assets offset by current liabilities. We
supplement working capital requirements with borrowings under our revolving
credit facilities (see Long-Term Debt Obligations) as required. Cash of
$151.0 million at September 30, 2006 increased $108.7 million from $42.3
million at December 31, 2005 and short-term Marketable securities had a balance
of $26.1 million at September 30, 2006. During the nine months ended September
30, 2006, excess cash was primarily used for capital expenditures to purchase
vessels, for investments in marketable securities and other interest bearing
instruments, to repurchase common stock and repay bank debt. Net cash provided
by operating activities of $247.4 million for the nine months ended September
30, 2006 increased $5.9 million compared to $241.5 million for the nine months
ended September 30, 2005, primarily from higher net earnings from operations, excluding
the gain on disposal of vessels, of the Company (see Results of Operations).
Our working capital increased by $127.4 million from $19.6 million at December
31, 2005 to $147.0 million at September 30, 2006. The increase in working
capital was primarily the result of the increased amounts for a vessel held for
sale of $21.6 million and increased cash and marketable securities aggregating
$134.8 million resulting from vessel sales and cash from operations. Current
liabilities of $131.9 million at September 30, 2006 increased $23.7 million
from December 31, 2005 because of increases in charter hire payables of $9.2
million for additional vessels chartered-in, deferred charter hire of $5.4
million for additional vessels on time charter, accrued voyage and vessel of
$6.5 and accrued other liabilities of $5.0 million. At September 30, 2006,
fluctuations relating to certain current assets and liabilities are
attributable to timing differences of cash receipts and disbursements and
accruals for revenue and expenses in a particular period and are not
necessarily comparable between periods.

Our
current intention, subject to the Companys financial condition, the amount of
funds generated from operations, the level of capital expenditures

43

---



and approval by our Board of
Directors, is to continue to pay a regular quarterly dividend to holders of our
common stock. It is also our intention to buy back shares opportunistically and
repay debt with excess cash.

As
of September 30, 2006, the Company had no capital commitments to acquire
vessels. The Company estimates expenditures for drydock to aggregate
approximately $1.8 million for the remainder of 2006 and approximately $7 to $8
million in 2007.

Vessels,
Construction in Progress (CIP) and Other Property and Vessel Held for Sale

At
September 30, 2006, Vessels (including Vessels held for sale), CIP and Other
Property-net of $1,395.8 million decreased a net of $176.5 million from
$1,572.3 million at December 31, 2005. Decreases of approximately $246.6
million were due to disposals, primarily from the sale of 2 Panamax vessels in
March 2006 and 4 Suezmax vessels in April, May and June of 2006. Accumulated
depreciation increased by $45.8 million from 2006 depreciation and amortization
vessels and other property. Increases, which partially offset the decreases,
resulted from additions to capital expenditures of approximately $115.5 million
for the nine months ended September 30, 2006, which were primarily for the
final payments for five newbuildings, capital improvements and capitalized
interest.

Cash
provided by investing activities was $227.2 million for the nine months ended
September 30, 2006 compared to cash used by investing activities of $93.5
million for the nine months ended September 30, 2005. During the 2006 period,
proceeds from the disposal of vessels of $376.5 million were offset by $115.5
million used for capital expenditures (detailed below) and payments for
Marketable securities of $26.1 million:

| |   |                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------
| |  | $113.4 million was used for the purchase of 5
  product carrier newbuildings delivered and capitalized interest; and
| |  | $2.1 million was used for capital expenditures for
  improvements to existing vessels.                              

Cash
used by investing activities of $93.5 million for the nine months ended
September 30, 2005 was used primarily for capitalized expenditures of $134.4
million:

| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | $116.5 million was used for the purchase of five
  product carrier newbuildings delivered,                     
| |  | $12.8 million was paid for vessels under
  construction, and                                                   
| |  | $5.1 million was used for capital expenditures for
  improvements to existing vessels and capitalized interest.

Cash
used by investing activities during the 2005 period was offset by proceeds
received from the disposal of two vessels of $36.8 million.

Long-Term Debt Obligations and Credit Arrangements

As
of September 30, 2006, long-term debt obligations decreased $244.3 million to
$651.6 million from $895.9 million at December 31, 2005. Long-term obligations
at September 30, 2006 consisted of the following:

| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Term loans of $283.9 million under bank mortgage
  agreements at variable rates based on the London Interbank Offering Rate
  (LIBOR) plus a margin;(1),(2)

44

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| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | Term loan of $22.9 million under bank mortgage
  agreements at a fixed rate of 5.30%;                                                          
| |  | Reducing revolving facilities of $0 (no outstanding
  balance) under bank mortgage agreements at variable rates based on LIBOR plus
  a margin;
| |  | 7.625% Unsecured Senior Notes due December 2013 of
  $200.0 million; and                                                                       
| |  | 2.875% Unsecured Convertible Senior Notes due
  December 2024 of $144.8 million.                                                               

Note:
As of September 30, 2006, the available undrawn amount under our reducing
revolving facilities aggregated $515.5 million.

|    |                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Average interest rates at September 30, 2006 were 5.83%
  including margins that ranged from 0.675% to 0.80%. Under our loan
  agreements, LIBOR can range from 30 days to one year.                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                           
|(2) | As of September 30, 2006, OMI had various interest rate
  swaps with notional amounts aggregating $173.0 million (not including $100.0
  million scheduled to begin in November 2006) of variable rate debt ranging
  from 2.90% to 5.32% (excluding margins) with maturity dates of the swaps
  ranging from October 2008 to August 2012.

Cash
used by financing activities was $365.9 million for the nine months ended
September 30, 2006 compared to cash used by financing activities of $161.5
million for the nine months ended September 30, 2005. During the nine months
ended September 30, 2006, we received net proceeds of $376.5 million from the
disposal of 6 vessels, repaid $291.3 million in debt ($74.3 million in
repayments were for the vessels disposed of, $197.0 million in unscheduled
repayments on credit facilities and $20.0 in scheduled repayments), paid $115.5
million for capital expenditures, primarily for the final payments for the
acquisition of 5 vessels and drew down $47.0 million under our credit
facilities. We also paid cash dividends of $19.5 million in January, April and
July 2006 and bought back $102.1 million of the Companys common stock.

Cash
used by financing activities was $161.5 million for the nine months ended
September 30, 2005. During the nine months ended September 30, 2005, we made
$199.9 million in principal payments ($23.7 million were scheduled payments and
$110.0 million were unscheduled prepayments on revolving credit facilities,
$44.4 million payments were for early extinguishment of 2.875% Convertible
Notes and $21.8 million in prepayments of a term loan now collateralized by the
$320 Facility). During the nine months ended September 30, 2005, we received
proceeds of $180.0 million; $134.0 million from our revolving credit facilities
and $46.0 million from a term loan. During the nine months ended September 30,
2005, we paid cash of $120.9
million to repurchase 6.7 million shares of common stock and approximately
$19.5 million of cash dividends paid to shareholders in January 2005, April and
July 2005.

Our
debt to total capitalization ratio (debt and stockholders equity) at September
30, 2006 was 43% and net debt (total debt less cash and cash equivalents, and
marketable securities) to total net capitalization (total capitalization less
cash and cash equivalents, and marketable securities) was 35%. As of November
6, 2006, we have approximately $622.6 million in available liquidity (including
cash and undrawn lines of credit). We expect to use cash from operations,
undrawn balances available to us through our revolving facilities, or committed
bank debt to finance future capital expenditures. Since we have not borrowed
all funds available under these two revolving facilities, there are currently
no payments due in the next 12 months.

45

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Unsecured
Senior Notes and Subsidiary Guarantees

On
November 26, 2003, the Company issued $200.0 million of 7.625% Senior Notes
(the Notes) due December 1, 2013, with allowances for optional redemptions on
or after December 1, 2008. The Notes accrue interest at the rate of 7.625% per
year, payable semiannually in arrears on June 1 and December 1. The Notes are
general unsecured, senior obligations of the Company.

2.875%
Convertible Notes Due 2024

On
December 7, 2004, OMI issued $250 million of convertible notes due December
2024. In September 2006, the Board increased the quarterly dividend by 25% and
declared a dividend of $0.125 per share to shareholders of record on October 2,
2006. The dividend of $8,368,000 was paid on October 11, 2006, and in 2006 we
have paid total dividends of $0.405 per share. When the October dividend
was paid, the conversion ratio and conversion price for our 2.875% Convertible
Notes ($144.8 million currently outstanding) were adjusted as per the
agreement, the threshold of $0.28 per share was reached. The conversion ratio
increased from 32.5895 to 32.7842 for each $1,000 bond, and the conversion
price decreased from $30.68 to $30.50 per share, which is 40% above our stock
price of $21.71 at September 30, 2006.

Restrictive
Covenants

All
of our loan agreements contain restrictive covenants as to cash, maintenance of
specified financial ratios, collateral values and other non-financial
restrictions. As of September 30, 2006, we were in compliance with all
covenants.

Interest Rate Swaps

As
of September 30, 2006, we had various interest rate swaps aggregating $273
million (which includes notional amounts aggregating $100 million for 2
interest rate swaps that commence in November 2006) for related loans that are
designated to hedge various debt tranches within a range of 2.9% to 5.32%
(before margins) expiring from October 2008 to November 2014. The Company pays
fixed-rate interest amounts and receives floating-rate interest amounts based
on three month LIBOR settings (for a term equal to the swaps reset periods).
As of September 30, 2006, the Company recorded an asset of $4.7 million related
to the fair market value of these hedges and a corresponding unrealized gain of
$4.7 million to Other comprehensive income (loss).

Forward
Freight Agreements

During
March and April, 2006, the Company entered into 2 three year FFA contracts
(synthetic time charters) which are designated as cash flow hedges. The
contracts are at a fixed rate of $36,000 a day over a three-year period beginning
July 1, 2006 and are hedging 11⁄2 Suezmax vessels trading on the spot market over
the same period. In July and August 2006, we entered into 5 synthetic time
charters, a three year contract for a Suezmax vessel at $37,250 per day
beginning in July 2006 and a six month contract for 1⁄2 Suezmax vessel at $47,500
per day beginning in July 2006, a three year contract for a 1⁄4 Suezmax vessel at
$40,000 per day beginning in October 2006, and two three year contracts for a 1⁄2
Suezmax vessel and a 1⁄4 Suezmax vessel at $40,250 per day, beginning in October
2006. We currently have synthetic time charters of $138 million from October 1,
2006 through September 2009. As of September 30, 2006, the Company has recorded
a

46

---



liability of $10.0 million related to the
fair value of these hedges, an asset of $0.3 million and a corresponding
unrealized loss or $9.7 million to Other comprehensive income in the Condensed
Consolidated Balance Sheet. For the nine months ended September 30, 2006, the
realized loss on closed speculative contracts aggregated $0.1 million and the
unrealized gain on the open contracts of $2.1 million is recorded in Other in
the Condensed Consolidated Statement of Income.

At
September 30, 2006, the FFAs (including both economic or speculative hedges and
accounting hedges) had an aggregate notional value of $179.4 million, which was
an aggregate of our short and long positions that extend to October 2009.

The
Company is exposed to credit loss in the event of non-performance by the
counter parties to the interest rate swap agreements and forward freight
agreements; however, the Company does not anticipate non-performance by any of
the counter parties.

Contracted Time Charter Revenue

The
contracted TC revenue schedule below does not include any estimates for profit
sharing in the future periods; profit sharing for 10 vessels of approximately
$22.1 million earned during the nine months ended September 30, 2006 is
included. We have reduced future contracted revenue for any estimated off-hire
days relating to drydocks.

The
following table reflects our actual results for the nine months ended September
30, 2006 and current contracted time charter revenue (see Financial Summary
section), through 2012, including the 2 recent contracts for long-term time
charters (1 product carrier contracted for one year in July and one recent
three year contract for a product carrier in October) and including synthetic
time charter contracts:

Contracted Time Charter Revenue - 50 100 150 200 250 300 350 2006 2007 2008 2009 2010-2012 $ Millions


|                                     |  |      |       |      |                       |       |  |      |       |           |   |       |     |   |      | 
|------------------------------------ |  | ---- | ----- | ---- | --------------------- | ----- |  | ---- | ----- | --------- | - | ----- | --- | - | ---- | 
|                                     |  | 2006 |       | 2007 |                       | 2008  |  | 2009 |       | 2010-2012 |  
|                                     |  |      |       |      |                       |       |  |      |       |           |  
|                                     |  |      |       |      | (Dollars in millions) |       |  |      |      
|TC
  Revenue                         |  | $    | 282.3 |      | $                     | 304.9 |  | $    | 249.4 |           | $ | 135.8 |     | $ | 73.6 | 
|Number
  of Vessels(a)               |  |      | 36    |      |                       | 33    |  |      | 21    |           |   | 10    | (b) |   |     | 
|Vessels
  relating to Synthetic TCs |  |      | 4.0   |      |                       | 3.5   |  |      | 3.5   |           |   |      |     |   |     | 

47

---



|    |                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------
|(a) | Number of vessels at the end of each year assuming no additional
  extensions or new charters.       
|(b) | The remaining charters expire as follows: 8 charters will expire in
  2010 and 2 will expire in 2012.

If
certain vessels with time charter contracts are sold, it would reduce our
future time charter revenue.

We
recognize profit sharing, if any, for each vessel with a profit sharing
provision in the time charter contract when the minimum threshold is met, which
is the minimum charter hire revenue.
Historically, we have recognized profit sharing on or about the
anniversary of each time charter contract. The table below reflects the number
of vessels we expect to record profit sharing for by quarter and actual profit
sharing for the first and second quarters of 2006:

|               |  |      |    |      |  |      |  |      |    |      |  |   |  |  |   | 
|-------------- |  | ---- | -- | ---- |  | ---- |  | ---- | -- | ---- |  | - |  |  | - | 
|               |  | 2006 |    | 2007 |  | 2008 |  | 2009 |    | 2010 | 
|               |  |      |    |      |  |      |  |      |    |      | 
|              
|First Quarter  |  |      | 1  |      |  | 3    |  |      | 3  |      |  | 1 |  |  |  | 
|Second Quarter |  |      | 5  |      |  | 7    |  |      | 6  |      |  | 6 |  |  | 3 | 
|Third Quarter  |  |      | 4  |      |  | 4    |  |      | 4  |      |  | 2 |  |  | 1 | 
|Fourth Quarter |  |      | 1  |      |  | 1    |  |      |   |      |  |  |  |  |  | 
|               |  |      |    |      |  |      |  |      |    |      |  |   |  |  |   | 
|Total          |  |      | 11 |      |  | 15   |  |      | 13 |      |  | 9 |  |  | 4 | 
|               |  |      |    |      |  |      |  |      |    |      |  |   |  |  |   | 

2006 Expenditures for Drydock

OMI
evaluates certain vessels to determine if a drydock, special survey, both a
drydock combined with a special survey or a postponement is appropriate for
each vessel. We have vessels inspected and evaluated regularly in anticipation
of a drydock during the year. Currently, we plan to drydock two vessels in the
remainder of 2006. The aggregate cost for the year including the three previously
drydocked is expected to be approximately $3.9 million. The 5 vessels will
incur up to an aggregate of approximately 115 off-hire days for 2006.

The
following is a breakdown of the actual first half of the year and third quarter
and the projected drydocks for the fourth of 2006 as well as the estimated
drydock cost (in thousands). The vessel segment and charter type (spot or TC)
for vessels drydocked in 2006 were all product carriers on time charter:

|                   |  |  |          |  |               |     | 
|------------------ |  |  | -------- |  | ------------- | --- | 
|Drydock for        |  |  | Days     |  | Projected     |    
|2006 Periods       |  |  | Off-hire |  | Costs         |    
|                   |  |  |          |  |               |    
|                   |  |  |          |  | (in millions) |    
|                   |  |  |          |  |               |     | 
|First Half         |  |  | 24       |  | $             | 0.5 | 
|Third
  Quarter    |  |  | 43       |  |               | 1.6 | 
|Fourth
  Quarter * |  |  | 48       |  |               | 1.8 | 
|                   |  |  |          |  |               |     | 
|Total              |  |  | 115      |  | $             | 3.9 | 
|                   |  |  |          |  |               |     | 

* Projected

Dividends

On
September 7, 2006, the Board of Directors of OMI declared a dividend on its
common stock of $0.125 per share to shareholders based on the number of common
shares outstanding of 66.9 million to holders of record on October 2, 2006. As
of September 30, 2006, $8.4 million was accrued for dividends

48

---



payable in the
Condensed Consolidated Balance Sheets. The dividend was paid on October 11,
2006.

Acquisition and Retirement of Common Stock

The
Company has a stock buy back and retirement program in place. In February,
April and September of 2006, the Board approved 3 repurchase programs
authorizing $210.0 million for the repurchase of common stock. For the nine
months ended September 30, 2006, we repurchased and retired 5.4 million shares
of common stock at an average of $18.84 per share, aggregating approximately
$102.1 million. At September 30, 2006, approximately $108 million remained from
the authority.

During
October and up to November 6, 2006, we repurchased approximately 3.6 million
shares of common stock at an average price of $22.24 per share, aggregating
approximately $79.3 million. As of November 6, 2006, there were 63.2 million
shares of common stock outstanding and $28.7 million remains under Board
authority for share repurchases.

Restricted Stock

At
September 30, 2006, the Company had share-based awards outstanding under three
stock-based incentive compensation plans: the 2001 Restricted Stock Plan, the
2003 Stock Incentive Plan and the 1998 Stock Option Plan. These plans provided
for the granting of options and restricted stock awards to officers, employees,
consultants and directors for purchase of the Companys common shares. A
detailed description of these plans can be found in the Companys 2005 Annual
Report on Form 10-K.

On
April 27, 2006, our shareholders approved the 2006 Incentive Compensation Plan.
This plan provides for, at the discretion of the Compensation Committee, awards
of up to 5 million shares of restricted stock awards, stock options or other
form of share-based compensation to directors, officers, employees and
consultants of the Company. No further awards may be made under any of the
prior plans.

On May 31,
2006, the Compensation Committee approved the grant of 0.7 million shares of
restricted stock awards to executive officers and directors at a grant date
fair value of $18.64 per share. On September 14, 2006, the Compensation
Committee approved the grant of 0.2 million shares of restricted stock awards
to employees at a grant date fair value of $20.83 per share. At September 30,
2006, there were 2.4 million shares of restricted stock outstanding at an
average fair value at grant date of $14.62 per share.

Other Commitments and Contingencies

Please
refer to the appropriate sections within the Financial Condition and Capital
Resources section for other commitments disclosed.

Other

OMI
and certain subsidiaries are defendants in various actions arising from
shipping operations. Such actions are covered by insurance or, in the opinion
of management; the ultimate resolution of these matters will not have a
material adverse effect on the financial condition, results of operations or
cash flows of the Company. Management accrues an estimate of expense for any
matters that are considered probable of occurring based on the facts and
circumstances.

49

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Contractual
Obligations

The
following table lists contractual obligations by required payment periods as of
September 30, 2006:

|                                  |  |                        |       |         |           |           |  |           |       |            |   |       |  |   |       | 
|--------------------------------- |  | ---------------------- | ----- | ------- | --------- | --------- |  | --------- | ----- | ---------- | - | ----- |  | - | ----- | 
|                                  |  | Payments Due By Period |      
|                                  |  |                        |       |         | Remainder |           |  |           |       |            |   |       |  |   |      
|(in millions)                     |  | Total                  |       | of 2006 |           | 2007-2008 |  | 2009-2010 |       | Thereafter |  
|                                  |  |                        |       |         |           |           |  |           |       |            |  
|Contractual Obligations           |  |                        |       |         |           |           |  |           |       |            |   |       |  |   |       | 
|LongTerm
Debt(1)                 |  | $                      | 651.6 |         | $         | 7.4       |  | $         | 56.7  |            | $ | 50.8  |  | $ | 536.7 | 
|Interest on
  Fixed Rate Debt     |  |                        | 142.2 |         |           | 10.3      |  |           | 40.8  |            |   | 40.1  |  |   | 51.0  | 
|Interest on
Variable Rate Debt(2) |  |                        | 85.1  |         |           | 4.0       |  |           | 32.3  |            |   | 25.3  |  |   | 23.5  | 
|Operating
Leases(3)               |  |                        | 293.6 |         |           | 14.5      |  |           | 124.5 |            |   | 108.4 |  |   | 46.2  | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In October 2006, OMI prepaid the remaining balance of the $34.475
  million term loan due August 2011 in the amount of $26.5 million.                                                                                                                                                                                                                                                           
|(2) | Variable rate interest is based on a projected LIBOR rate of 5.5
  percent plus applicable margins.                                                                                                                                                                                                                                                                                             
|(3) | Contractual obligations relating to future minimum lease payments
  required by year, under operating leases subsequent to September 30, 2006,
  include leases for the chartering-in of vessels and the lease obligation for
  our office space and are not included as liabilities on the Consolidated
  Balance Sheet, since such payments relate to services to be provided in the
  future.

Off-Balance-Sheet
Arrangements

As of
September 30, 2006, we did not have any significant off-balance-sheet
arrangements, as defined in Item 303(a) (4) (ii) of SEC Regulation S-K.

Effects of Inflation

The
Company does not consider inflation to be a significant risk to the cost of
doing business in the current or foreseeable future. Inflation has a moderate
impact on operating expenses, drydocking expenses and corporate overhead.

Newly Issued Accounting Principles

Except
for Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, (SFAS 123(R)),
no new accounting pronouncements that became effective during the three and
nine months ended September 30, 2006, had a material effect on our financial
position or results of operations. The additional disclosure requirements of
SFAS No. 123 (R) are presented in Note 6 to the financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurement (SFAS No. 157). SFAS No. 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about assets and liabilities measured at fair value. This Statement does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of SFAS No. 157, and has not yet determined the impact that its adoption will have on its results of operations and financial position.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
(SAB 108), which provides interpretive guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 is effective for the Company
as of December 31, 2006. The Company is currently assessing the impact of SAB No. 108, and does not believe that its adoption will have a material impact on its results of operations and financial position.

Forward-Looking
Statements

This
report contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the Securities Act) and Section 21E
of the Securities Exchange Act of 1934, as amended (the Exchange Act) and the
Private Securities Litigation Reform Act of 1995 and are intended to be covered
by the safe harbor provided for under these sections. These statements may
include words such as believe, estimate, project, intend, expect,
plan, anticipate, and similar expressions in connection with any discussion
of the timing or nature of future operating or financial performance or other
events. Our forward-looking statements include, without limitation:

50

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| |   |                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | estimates of
  future earnings and cash flows and the sensitivity of earnings and cash flows
  to charter rates;                                                  
| |  | estimates of
  when vessels may be contracted for sale and delivered to buyers;                                                                                   
| |  | estimates of
  when laws, regulations or commercial decisions may remove older vessels from
  markets or enhance the value or earnings of double hulled vessels;  
| |  | statements
  as to the projected development of the Companys strategy and how it may act
  to implement its strategy;                                            
| |  | estimates of
  future costs and other liabilities for certain environmental matters;                                                                              
| |  | estimates
  relating to expectations in world economic activity, growth in the demand for
  crude oil and petroleum products and their affect upon tanker markets;
| |  | estimates of
  the number of drydockings of vessels, their costs and the number of related
  off-hire days; and                                                   
| |  | statements
  regarding financial hedges and their affects.                                                                                                        

Where
we express an expectation or belief as to future events or results, such
expectation or belief is expressed in good faith and believed to have a
reasonable basis. However, our forward-looking statements are subject to risks,
uncertainties, and other factors, which could cause actual results to differ
materially from future results expressed, projected, or implied by those
forward-looking statements. Such risks include, but are not limited to, supply
of tankers, demand for their use, world economic activity, breakdown of vessels
and resultant time out of service as well as repair cost, availability and cost
of insurance, governmental regulation, customer preferences and availability
and cost of financing.

All
subsequent written and oral forward-looking statements attributable to persons
acting on our behalf are expressly qualified in their entirety by the
cautionary statements. We disclaim any intent or obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise, except as may be required under applicable securities
laws.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

Interest Rate Risk

The
Company is exposed to market risk from changes in interest rates, which could
impact its results of operations, financial condition and cash flow. The
Company manages its ratio of fixed to floating rate debt with the objective of
achieving a mix that reflects managements interest rate outlook at various
times by entering into interest rate swap agreements, in which it agrees to pay
a fixed interest rate and receive market interest rate based on contracted
notional amounts and for specific period of time. The interest rate
swaps are entered into with financial institutions that have investment grade
credit ratings, thereby minimizing the risk of credit loss. The Company uses such derivative financial
instruments as risk management tools and not for speculative or trading
purposes. At September 30, 2006, the floating rate debt, taking into account
the interest rate swaps referred to herein, was $11.0 million of the $651.6
million total debt, and we had interest rate swaps relating to the floating
rate debt of $273 million (including $100.0 million on interest rate swaps that
commences in November 2006). At December 31, 2005, the floating rate debt was
$497.1 million, and we had interest rate swaps relating to the floating rate
debt of $206.8 million (including $112.4 million on interest rate swaps that
commence in 2006). Based on the floating rate debt at September 30, 2006, a

51

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one-percentage point
increase in the floating interest rate would increase interest expense by $0.1
million per year.

The
fair market value of the fixed rate debt on our balance sheet was $366.2
million as of September 30, 2006, and $386.6 million as of December 31, 2005.

The
table below provides information about interest rates, including our debt
obligations and interest rate swaps at September 30, 2006. For debt
obligations, the table presents principal cash flows and related weighted
average interest rates by expected maturity dates. For interest rate swaps, the
table presents notional amounts and weighted average interest rates by expected
contractual maturity dates.

|                        |  |                                     |       |                      |                         |      |   |                                     |      |      |   |      |   |            |      |   |   |      |   |   |       |  
|----------------------- |  | ----------------------------------- | ----- | -------------------- | ----------------------- | ---- | - | ----------------------------------- | ---- | ---- | - | ---- | - | ---------- | ---- | - | - | ---- | - | - | ----- | -
|                        |  |                                     |       |                      | Expected Maturities (1) |     
|                        |  |                                     |       |                      |                         |     
|                        |  | Balance as of 
  September 30, 2006 |       | Remainder 
  of 2006 |                         | 2007 |   | 2008                                |      | 2009 |   | 2010 |   | Thereafter |     
|                        |  |                                     |       |                      |                         |      |   |                                     |      |      |   |      |   |            |     
|                        |  |                                     |       |                      |                         |      |   | (In
  millions, except percentages) |      |      |   |     
|Long-Term Debt:         |  |                                     |       |                      |                         |      |   |                                     |      |      |   |      |   |            |      |   |   |      |   |   |       |  
|Fixed-Rate
Debt(2)      |  | $                                   | 367.7 |                      | $                       | 0.9  |   | $                                   | 3.6  |      | $ | 3.6  |   | $          | 3.6  |   | $ | 3.6  |   | $ | 352.4 |  
|Average Interest  Rate  |  |                                     |       |                      |                         | 5.61 | % |                                     | 5.61 | %    |   | 5.62 | % |            | 5.62 | % |   | 5.62 | % |   | 7.00  | %
|                        |  |                                     |       |                      |                         |      |   |                                     |      |      |   |      |   |            |      |   |   |      |   |   |       |  
|                        |  |                                     |       |                      |                         |      |   |                                     |      |      |   |      |   |            |      |   |   |      |   |   |       |  
|Variable Rate Debt(2)   |  |                                     | 283.9 |                      |                         | 6.5  |   |                                     | 21.4 |      |   | 29.7 |   |            | 27.1 |   |   | 18.1 |   |   | 181.1 |  
|                        |  |                                     |       |                      |                         |      |   |                                     |      |      |   |      |   |            |      |   |   |      |   |   |       |  
|                        |  |                                     |       |                      |                         |      |   |                                     |      |      |   |      |   |            |      |   |   |      |   |   |       |  
|Interest Rate Swaps:(3) |  |                                     |       |                      |                         |      |   |                                     |      |      |   |      |   |            |      |   |   |      |   |   |       |  
|Contract Amount         |  |                                     | 273.0 |                      |                         | 7.3  |   |                                     | 23.8 |      |   | 52.1 |   |            | 47.8 |   |   | 28.3 |   |   | 113.7 |  
|Average Fixed  Pay Rate |  |                                     |       |                      |                         | 4.40 | % |                                     | 4.41 | %    |   | 4.50 | % |            | 4.83 | % |   | 4.86 | % |   | 4.83  | %
|                        |  |                                     |       |                      |                         |      |   |                                     |      |      |   |      |   |            |      |   |   |      |   |   |       |  

|    |                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These are the expected maturities based on the balances as of
  September 30, 2006.                                                                                                          
|(2) | The interest rates for the variable rate debt are based on LIBOR
  contracts, which range from 30 days to one year. In 2010, $7.6 million of
  fixed rate debt reverts to variable rate debt.
|(3) | Includes two $50.0 million swaps beginning November 2006.                                                                                                                                    

Spot
Market Rate Risk

We
use written forward freight agreements (FFAs) as a hedge to protect against
the change in spot market rates earned by some of our vessels. FFAs involve
contracts to provide theoretical voyages at fixed rates thus hedging a portion
of the Companys exposure to the spot charter market. See section Forward
Freight Agreements abovefor OMIs exposure as of September 30, 2006.

52

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Item 4. Controls and Procedures

Evaluation
of Disclosure Controls and Procedures

The
Companys Chief Executive Officer and Chief Financial Officer have reviewed and
evaluated the effectiveness of the Companys disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934 [the Exchange Act]), as of the end of the period covered by this Form
10-Q, based on the evaluation of the Companys disclosure controls and
procedures required by paragraph (b) of Exchange Act Rules 13a-15 and 15d-15.
Based on their evaluation as of the end of the period covered by this Form
10-Q, our Chief Executive Officer and Chief Financial Officer have concluded
that our disclosure controls and procedures were effective.

Changes in Internal Controls

There
was no change in our internal control over financial reporting that occurred
during the period covered by this Form 10-Q that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

53

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PART II: OTHER INFORMATION

Item
1  Legal Proceedings

None.

Item
1A  Risk Factors

There
are no material changes from the risk factors previously disclosed in the
Companys December 31, 2005 Annual Report on Form 10-K.

Item
2  Changes in Securities and Use of
Proceeds

Stock Repurchases

During
February, April and September 2006, OMIs Board of Directors approved three new
authorities to expend $210,000,000 for the repurchase of shares of common stock
(the February 2006 authority completed in April and the April authority was
completed in October 2006). As of November 6, 2006, an additional 3,564,869
shares were purchased in the fourth quarter of 2006 and $28,728,223 remains
available under the September authority.

The
following table shows the monthly 2006 stock repurchase activity:

|               |  |                  |           |                |   |                                                                          |  |                                                                           |           |  |  |           |    
|-------------- |  | ---------------- | --------- | -------------- | - | ------------------------------------------------------------------------ |  | ------------------------------------------------------------------------- | --------- |  |  | --------- | ---
|               |  | Total Number of  |           | Average Price  |   | Total Number of 
Shares Purchased 
As Part of 
Publicly 
Announced Plans |  | Maximum Number 
of Shares that 
May Yet Be 
Purchased Under 
the Plans or |          
|Period         |  | Shares Purchased |           | Paid per Share |   | or Program                                                               |  | Programs                                                                  |          
|               |  |                  |           |                |   |                                                                          |  |                                                                           |          
|               |  |                  |           |                |   |                                                                          |  |                                                                           |           |  |  |           |    
|March 2006     |  |                  | 1,248,300 |                |   | 18.15                                                                    |  |                                                                           | 1,248,300 |  |  | 2,598,174 |    
|April 2006     |  |                  | 957,500   |                |   | 18.21                                                                    |  |                                                                           | 957,500   |  |  | 5,469,671 | (a)
|May 2006       |  |                  | 1,218,000 |                |   | 18.49                                                                    |  |                                                                           | 1,218,000 |  |  | 4,251,671 |    
|June 2006      |  |                  | 1,680,000 |                |   | 19.45                                                                    |  |                                                                           | 1,680,000 |  |  | 2,571,671 |    
|July 2006      |  |                  | 57,500    |                |   | 20.48                                                                    |  |                                                                           | 57,500    |  |  | 2,130,177 |    
|August 2006    |  |                  | 0         |                |   | n/a                                                                      |  |                                                                           | n/a       |  |  | 2,130,177 |    
|September 2006 |  |                  | 261,500   |                |   | 21.43                                                                    |  |                                                                           | 261,500   |  |  | 5,039,160 | (a)
|October 2006   |  |                  | 3,190,300 |                |   | 22.23                                                                    |  |                                                                           | 3,190,300 |  |  | 1,848,860 |    
|November 2006  |  |                  | 374,569   |                |   | 22.33                                                                    |  |                                                                           | 374,569   |  |  | 1,286,680 | (a)
|               |  |                  |           |                |   |                                                                          |  |                                                                           |           |  |  |           |    
|Total          |  |                  | 8,987,669 |                | $ | 20.19                                                                    |  |                                                                           | 8,987,669 |  |  |           |    
|               |  |                  |           |                |   |                                                                          |  |                                                                           |           |  |  |           |    

|    |                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------
|(a) | Remaining shares represents the remaining dollar amount authorized
  and the average purchase price in the related month.

Restricted
Stock

In
May 2006, the Compensation Committee approved the award of 712,119 shares of
restricted stock at fair value a grant price of $18.64 per share to a senior
officers and directors. In September
2006, the Compensation Committee approved the award of 178,960 shares of
restricted stock to employees at a grant date price of $20.83 per share. Both
grants were pursuant to the Companys 2006 Incentive Compensation Plan,
which was approved by the shareholders in April 2006.

Item 3  Defaults upon Senior Securities

None.

54

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Item
4  Submission of Matters to a Vote of Security Holders

None.

Item 5  Other Information

None.

Item
6  Exhibits

|   |                                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a. | Exhibits                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                              
|   | 31.1     OMI
  Corporations certification by the Chief Executive Officer on Form 10-Q for
  the period ending September 30, 2006 as adopted pursuant to section 302 of
  THE SARBANES-OXLEY ACT OF 2002.                                    
|   |                                                                                                                                                                                                                                              
|   | 31.2     OMI
  Corporations certification by the Chief Financial Officer on Form 10-Q for
  the period ending September 30, 2006 as adopted pursuant to section 302 of
  THE SARBANES-OXLEY ACT OF 2002.                                    
|   |                                                                                                                                                                                                                                              
|   | 32.1     OMI
  Corporations certification by the Chief Executive Officer on Form 10-Q for
  the period ending September 30, 2006 pursuant to 18 U.S.C. Section 1350, as
  adopted pursuant to section 906 of THE SARBANES-OXLEY ACT OF 2002.
|   |                                                                                                                                                                                                                                              
|   | 32.2     OMI
  Corporations certification by the Chief Financial Officer on Form 10-Q for
  the period ending September 30, 2006 pursuant to 18 U.S.C. Section 1350, as
  adopted pursuant to section 906 of THE SARBANES-OXLEY ACT OF 2002.

55

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SIGNATURES

Pursuant to
the requirements of the Securities and Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.

OMI
CORPORATION

|             |                  |  |                                                                                                    |                                                                                        
|------------ | ---------------- |  | -------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------
|            
|(REGISTRANT)
|            
|Date:        | November 9, 2006 |  | By:                                                                                                | /s/ Craig H. Stevenson, Jr.                                                            
|             |                  |  |                                                                                                    |                                                                                        
|             |                  |  |                                                                                                    | Craig H. Stevenson, Jr. 
      Chairman of the Board and 
      Chief Executive Officer
|             |                  |  |                                                                                                    |                                                                                        
|Date:        | November 9, 2006 |  | By:                                                                                                | /s/ Kathleen C. Haines                                                                 
|             |                  |  |                                                                                                    |                                                                                        
|             |                  |  | Kathleen C. Haines 
      Senior Vice President,
      Chief Financial Officer
      and Treasurer

56

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