<PAGE>

             BEING FILED PURSUANT TO RULE 901 (D) OF REGULATION S-T


                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR
                  15 (D) OF THE SECURITIES AND EXCHANGE ACT OF
                                      1934.

                For the quarterly period ended SEPTEMBER 30, 1997

                                       OR

             ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
                   OF THE SECURITIES AND EXCHANGE ACT OF 1934.

           For the period from                to

                             COMMISSION FILE NUMBER

                                     1-10164



                                    OMI CORP.


             (Exact name of registrant as specified in its charter)

                   DELAWARE                        13-2625280

        (State or other jurisdiction           (I.R.S. Employer
        incorporation or organization)         Identification No.)

      90 PARK AVENUE, NEW YORK, N.Y.               10016

          (Address of principal                   (Zip Code)
                                                executive offices)

Registrant's telephone number, including area code  (212) 986-1960

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.

                  Yes    X        No

INDICATE THE NUMBER OF SHARES  OUTSTANDING  OF EACH OF THE  ISSUER'S  CLASSES OF
COMMON STOCK, AS OF NOVEMBER 12, 1997 :

            Common Stock, par value 0.50 per share 43,066,679 shares


<PAGE>


                           OMI CORP. AND SUBSIDIARIES
                                      INDEX

PART I:   FINANCIAL INFORMATION                                            PAGE
                                                                           ----
ITEM 1.   FINANCIAL STATEMENTS

             Condensed Consolidated Statements of
               Operations for the three and nine months
               ended September 30, 1997 and 1996                              3

             Condensed Consolidated Balance Sheets-
               September 30, 1997 and December 31, 1996                       4

             Consolidated Statement of Changes in
               Stockholders' Equity for the nine months
               ended September 30, 1997                                       5

             Consolidated Statements of Cash Flows for the nine
                  months ended September 30, 1997 and 1996                    6

             Notes to Condensed Consolidated Financial
               Statements                                                     7

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               RESULTS OF OPERATIONS AND FINANCIAL CONDITION                 11


PART II:  OTHER INFORMATION                                                  20

SIGNATURES                                                                   21



                                      -2-
<PAGE>

                           OMI CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                      FOR THE THREE MONTHS               FOR THE NINE  MONTHS
                                                      ENDED SEPTEMBER 30,                 ENDED SEPTEMBER 30,

                                                       1997          1996                 1997           1996
-------------------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>                <C>                 <C>      
 Revenues:
 Voyage revenues                               $    52,112    $    55,952         $   163,499    $   175,446
  Other income                                       2,506          2,647               5,885          6,273
                                               -----------    -----------         -----------    -----------
    Total revenues                                  54,618         58,599             169,384        181,719
                                               -----------    -----------         -----------    -----------
Operating Expenses:
  Vessel and voyage                                 41,857         40,711             128,445        131,329
  Depreciation and amortization                      7,149          7,571              21,584         23,818
  General and administrative                         4,734          4,096              12,301         11,425
                                               -----------    -----------         -----------    -----------
    Total operating expenses                        53,740         52,378             162,330        166,572
                                               -----------    -----------         -----------    -----------
Operating income                                       878          6,221               7,054         15,147
                                               -----------    -----------         -----------    -----------
Other income (expense):
  Gain on disposal of assets-net                         2          9,232                 908         12,833
  Interest expense-net                              (1,994)        (6,866)             (7,600)       (20,009)
  Minority interest in income
    of subsidiary                                      (22)        (1,194)               (126)        (1,287)
                                               -----------    -----------         -----------    -----------
    Net other (expense) income                      (2,014)         1,172              (6,818)        (8,463)
                                               -----------    -----------         -----------    -----------

(Loss) income  before income  taxes,  
   equity in  operations  of joint  ventures,
   extraordinary loss and cumulative effect
   of change in accounting principle                (1,136)         7,393                 236          6,684
Provision for income taxes                              21          2,395               1,127          1,833
                                               -----------    -----------         -----------    -----------

(Loss) income before equity in operations
   of joint ventures,  extraordinary loss
   and cumulative effect of change in
   accounting principle                             (1,157)         4,998                (891)         4,851
Equity in operations of joint ventures              (3,774)            70                 (90)         1,136
                                               -----------    -----------         -----------    -----------

(Loss) income before extraordinary loss
   and cumulative effect of change in
   accounting principle                             (4,931)         5,068                (981)         5,987

Extraordinary loss, net of income taxes                 --         (3,022)                 --         (2,661)
Cumulative effect of change in accounting
   principle, net of income taxes of $7,429             --             --              13,797            --
                                               -----------    -----------         -----------    -----------
Net (loss) income                              $    (4,931)   $     2,046         $    12,816    $     3,326
                                               ===========    ===========         ===========    ===========

Earnings Per Common Share:
(Loss) income before extraordinary
   loss and cumulative effect of change
   in accounting principle                     $     (0.11)    $     0.16         $     (0.02)   $      0.19
Extraordinary loss, net of income taxes                 --          (0.10)                 --          (0.08)
Cumulative effect of change in
   accounting principle, net of income
   taxes                                                --             --               0.32             --
                                               -----------    -----------         -----------    -----------

Net (loss) income                             $      (0.11)   $      0.06         $      0.30    $      0.11
                                              ============    ===========         ===========    ===========

Weighted average number of shares
   of common stock outstanding                      42,956         31,558              42,866         31,420
                                              ============    ===========         ===========    ===========
</TABLE>

See notes to condensed consolidated financial statements.


                                      -3-
<PAGE>

                           OMI CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                    SEPTEMBER 30,              DECEMBER 31,
                                                       1997                        1996
                                                    ------------               ------------
                                                    (UNAUDITED)
<S>                                               <C>                       <C>          
ASSETS
Current assets:
 Cash, including cash equivalents: 1997-
  $20,202, 1996-$36,132                           $      23,309             $      47,877
 Advances to masters                                      1,427                     1,422
 Receivables:
   Traffic                                               11,886                    11,715
   Other                                                  9,191                    12,234
 Taxes receivable                                         2,660                       360
 Prepaid drydock expense                                  2,525                       --
 Other prepaid expenses and current assets               12,341                     5,558
 Vessels held for sale                                       --                    34,399
                                                  -------------             -------------

     Total current assets                                63,339                   113,565
                                                  -------------             -------------

Capital Construction Fund                                10,813                    10,283

Vessels and other property, at cost                     516,919                   527,461
Construction in progress                                 44,197                    10,754
Less accumulated depreciation                          (197,509)                 (186,152)
                                                  -------------             -------------

Vessels and other property-net                          363,607                   352,063
                                                  -------------             -------------
Investments in, and advances to joint ventures           62,303                    59,322

Note receivable                                           9,000                        --

Prepaid drydock expense                                   7,787                        --

Other assets and deferred charges                        21,963                    17,049
                                                  -------------             -------------

Total                                             $     538,812             $     552,282
                                                  =============             =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                $       4,499             $       6,278
  Accrued liabilities:
    Voyage and vessel                                    10,939                    17,555
    Interest                                              1,782                     4,150
    Other                                                 4,336                     3,443
  Deferred gain on sale of vessels                        5,809                        --
  Current portion of long-term debt                      21,499                    34,892
                                                  -------------             -------------
     Total current liabilities                           48,864                    66,318
                                                  -------------             -------------

Advance time charter revenues and other
 liabilities                                              3,651                     8,685
Deferred gain on sale of vessels                         31,751                        --
Deferred income taxes payable                            72,381                    63,808
Long-term debt                                          158,365                   202,256
Minority interest in subsidiary                           1,930                     3,637
Stockholders' equity                                    221,870                   207,578
                                                  -------------             -------------

Total                                             $     538,812              $    552,282
                                                  =============              ============
</TABLE>


See notes to condensed consolidated financial statements.


                                      -4-
<PAGE>

                           OMI CORP. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                     UNREALIZED
                                                                                      UNEARNED       GAIN (LOSS)
                                                       RETAINED       CUMULATIVE    COMPENSATION          ON               TOTAL
                        COMMON STOCK        CAPITAL    EARNINGS      TRANSLATION      RESTRICTED      SECURITIES      STOCKHOLDERS'
                     SHARES      AMOUNT     SURPLUS    (DEFICIT)      ADJUSTMENT        STOCK            -NET             EQUITY
                    ---------------------------------------------------------------------------------------------------------------
<S>                  <C>       <C>        <C>         <C>             <C>            <C>             <C>              <C>        
Balance at
   January 1, 1997   42,691    $ 21,346   $ 184,251   $ (1,848)       $   4,912      $  (1,039)      $     (44)       $   207,578

Net income                                              12,816                                                             12,816
Exercise of
   stock options        283         141       1,565                                                                         1,706

Issuance of
   restricted
   stock awards          50          25         413                                       (438)                                --

Retirement of
   minority
   stockholders'
   equity
   interest
   in subsidiary                               (549)                                                                         (549)

Amortization
   of unearned
   compensation                                                                             288                               288

Net change in
   valuation
   account                                                                                                    31               31
                     ------    --------    ---------  --------        ---------       ---------         --------        ---------
Balance at
   September
   30, 1997          43,024    $ 21,512    $ 185,680  $ 10,968        $   4,912       $  (1,189)        $    (13)       $ 221,870
                     ======    ========    =========  ========        =========       =========         ========        =========
</TABLE>


See notes to condensed consolidated financial statements.



                                      -5-
<PAGE>


                           OMI CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                              FOR THE NINE MONTHS
                                                                              ENDED SEPTEMBER 30,
                                                                              1997           1996
                                                                            --------       -------
<S>                                                                        <C>            <C>     
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income                                                                $  12,816       $  3,326

  Adjustments to reconcile  net income to net 
   cash provided  (used) by operating
   activities:
      Extraordinary loss, net of income taxes                                    --          2,661
      Cumulative effect of change in accounting
        principle, net of income taxes                                      (13,797)            --
      Increase in deferred income taxes                                       1,127          1,833
      Depreciation and amortization                                          21,584         23,818
      Amortization of unearned compensation                                     288            294
      Gain on disposal of assets-net                                           (908)       (12,833)
      Amortization of deferred gain on sale of vessel                        (2,925)            --
      Equity in operations of joint ventures
        under (over) dividends received                                          90           (768)
  Changes in assets and liabilities:
      Increase in receivables and other current assets                       (7,687)           (41)
      Decrease in accounts payable and accrued
        liabilities                                                          (4,177)       (23,110)
      Advances from joint ventures and affiliates - net                      (3,071)        (3,025)
      Increase in other assets and deferred charges                          (2,294)       (11,036)
      Decrease in advance time charter revenues
        and other liabilities                                                  (774)          (694)
      Other assets and liabilities - net                                        296            375
                                                                          ---------        --------
Net cash provided (used) by operating activities                                568        (19,200)
                                                                          ---------        --------

CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES:
 Proceeds from disposition of vessels and other property                     78,972         57,839
 Additions to vessels and other property                                    (44,886)       (14,909)
 Proceeds from sale of securities                                                --          1,079
 Proceeds and interest received and reinvested in
   Capital Construction Fund                                                   (552)          (476)
 Payments for the retirement of minority stockholders'
   interests in subsidiary                                                   (2,456)            --
                                                                          ---------       --------
Net cash provided by investing activities                                    31,078         43,533
                                                                          ---------       --------

CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES:
 Proceeds from issuance of common stock                                       1,706            541
 Proceeds from issuance of long-term debt                                   114,090        173,923
 Payments on long-term debt                                                (171,374)      (185,524)
 Payments for debt issue costs                                                 (636)        (1,160)
                                                                          ---------       --------
Net cash used by financing activities                                       (56,214)       (12,220)
                                                                          ---------       --------

Net (decrease) increase in cash and cash equivalents                        (24,568)        12,113
Cash and cash equivalents at beginning of period                             47,877         32,569
                                                                          ---------       --------
Cash and cash equivalents at end of period                                $  23,309       $ 44,682
                                                                          =========       ========
</TABLE>

See notes to condensed consolidated financial statements.



                                      -6-
<PAGE>


                           OMI CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


Note 1

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all  information  and  footnotes  necessary for a fair  presentation  of
financial  position,  results of operations  and cash flows in  conformity  with
generally  accepted  accounting  principles.  However,  in  the  opinion  of the
management  of  OMI  Corp.  and  subsidiaries  ("OMI"  or  the  "Company"),  all
adjustments  (comprising  only normal recurring  accruals)  necessary for a fair
presentation of operating results have been included in the statements.  Certain
accounts have been  reclassified in the 1996 financial  statements to conform to
their 1997 presentation.


Note 2 - Income Taxes

The provision for income taxes on income  excluding the  extraordinary  loss and
the cumulative  effect of change in accounting  principle  varies from statutory
rates as follows:
<TABLE>
<CAPTION>

                                               FOR THE THREE MONTHS                                FOR THE NINE MONTHS
                                               ENDED SEPTEMBER 30,                                 ENDED SEPTEMBER 30,
(in thousands)                                1997             1996                               1997              1996
                                        -----------      ----------                          ----------        ----------
<S>                                     <C>               <C>                                 <C>              <C>      
(Benefit) provision calculated at
 statutory rates                        $   (1,719)       $   2,612                           $     51         $   2,737
Adjustment for equity in operations
 of certain joint ventures                   1,740             (217)                             1,076              (904)
                                        -----------      ----------                          ----------        ----------
Provision                               $       21        $   2,395                           $  1,127         $   1,833
                                        ==========        =========                           ========         =========
</TABLE>

The  Company  has not  provided  deferred  income  taxes  on its  equity  in the
undistributed  earnings of foreign corporate joint ventures  accounted for under
the equity method other than Amazon  Transport,  Inc.  ("Amazon")  and White Sea
Holdings Ltd.  ("White Sea").  These earnings are considered by management to be
invested in the business for an indefinite period.


Note 3 - Supplemental Cash Flow Information

Cash payments include interest of approximately  $13,077,000 and $21,599,000 for
the nine months ended September 30, 1997 and 1996, respectively. Income taxes of
$4,708,000 were paid during the nine months of 1997.  There were no income taxes
paid during the nine months ended September 30, 1996.

In March 1997 the Company  delivered a vessel with net book value of  $9,800,000
to new  owners  as part  of an  exchange  transaction.  Cash  in the  amount  of
$11,000,000 was received and was held in an escrow account until the delivery of
the  vessel  in  April  1997  to  the  Company  which   completed  the  exchange
transaction.


                                      -7-
<PAGE>

Note 4 - Credit Lines/Loan Agreements

OMI has a revolving  credit/term loan agreement  providing for a credit facility
of $133,000,000  expiring in March 2002. The Company had an outstanding  balance
of $114,090,000  under this agreement at September 30, 1997 which was secured by
mortgages on eleven vessels. On October 3, 1997 a $5,000,000 payment was made on
this facility. The Notes under the credit facility bear interest at LIBOR plus a
margin  ranging from 60-95 basis points which is computed based on the Company's
funded debt to equity ratio and interest  coverage ratio.  The interest rates at
September  30,  1997 were 6.76  percent  and 6.39  percent on  $109,090,000  and
$5,000,000,  respectively. The Credit Facility contains financial covenants with
respect to cash,  interest rate  coverage,  net worth and funded debt to equity.
Dividends paid in any year are limited to 50 percent of net income in that year.

During October 1997, the Company entered into a commitment with existing lenders
for two new  revolving  credit  facilities  in the  amounts of  $50,000,000  and
$75,000,000.  These  credit  facilities  are to be used to finance on an interim
basis the  acquisition  of vessels and will be secured by such vessels.  Amounts
drawn on the new revolving credit  facilities are to be repaid no later than six
months after drawdown.  The credit facilities will bear interest at LIBOR plus a
margin  ranging from 55-80 basis points which is computed based on the Company's
funded debt to total  capitalization  ratio and interest coverage ratio. The new
credit facilities contain the same financial covenants as the facility described
above.

Note 5 - Guaranteed Debt

OMI and  affiliates of its joint  venture  partners act as  co-guarantors  for a
portion of the debt  incurred  by joint  ventures.  Such debt was  approximately
$17,542,000  at September 30, 1997,  with OMI's share of such  guarantees  being
approximately $8,744,000.

The Company and its joint venture  partners  have  committed to fund any working
capital  deficiencies which may be incurred by their joint venture  investments.
No such  deficiencies  have been funded in the nine months ended  September  30,
1997.


Note 6 - Accounting Change for Special Survey and Drydock Expenses

Effective  January 1, 1997,  the Company  changed its method of  accounting  for
special  survey and  drydock  expenses  from the  accrual  method to the prepaid
method.  Special  survey and drydock  expenses  had been  accrued and charged to
operating  expenses over the vessel's survey cycle,  which is generally a two to
three year period.  Under the prepaid  method,  survey and drydock  expenses are
capitalized  and  amortized  over  the  period  until  the  next  survey  cycle.
Management  believes the prepaid method better matches costs with revenues,  and
minimizes  any  significant  changes in  estimates  associated  with the accrual
method.  The cumulative  effect of this accounting change is shown separately in
the  consolidated  statement of operations and resulted in income of $13,797,000
(net of income taxes of $7,429,000), or $0.32 per share.


                                      -8-
<PAGE>


The  cumulative  effect of this change in accounting  principle as of January 1,
1997 on the Company's balance sheet was to increase total assets by $11,318,000,
decrease total liabilities by $2,479,000 and increase total stockholders' equity
by $13,797,000.


The three and six month periods ended March 31 and June 30, 1997,  respectively,
were previously presented using the accrual method of accounting.  The impact of
the  restatement  on the  Company's  statements  of  operations is summarized as
follows:

<TABLE>
<CAPTION>

                                                 FOR THE THREE MONTHS               FOR THE SIX MONTHS
                                                 ENDED MARCH 31, 1997               ENDED JUNE 30, 1997
                                                   AS                                   AS
                                               ORIGINALLY                           ORIGINALLY
                                                REPORTED           RESTATED          REPORTED        RESTATED
                                                --------           --------          --------        --------
<S>                                            <C>                <C>               <C>             <C>      
Income before cumulative effect
  of change in accounting principle            $   2,820          $   1,540         $   4,098       $   3,950
Cumulative effect of change in accounting
  principle, net of income taxes of $7,429            --             13,797                --          13,797
                                               ---------          ---------         ---------       ---------

Net income                                     $   2,820          $  15,337         $   4,098       $  17,747
                                               =========          =========         =========       =========
Earnings per common share:
Income before cumulative effect of
  change in accounting principle               $    0.07          $    0.04         $    0.10      $     0.09
Cumulative effect of change in accounting
  principle, net of income taxes                      --               0.32                --            0.32
                                               ---------          ---------         ---------       ---------
Net income                                     $    0.07         $     0.36         $    0.10      $     0.41
                                               =========         ==========         =========      ==========
</TABLE>

The three and nine month  periods ended  September 30, 1997 are presented  using
the accrual method of accounting.  Pro forma amounts for these periods  assuming
the prepaid method had been retroactively applied are summarized as follows:
<TABLE>
<CAPTION>

                                                 FOR THE THREE MONTHS               FOR THE NINE MONTHS
                                                ENDED SEPTEMBER 30, 1996         ENDED SEPTEMBER 30, 1996
<S>                                                   <C>                                <C>      
Income before extraordinary loss                      $   2,123                          $   1,977
                                                      =========                          =========

Net loss                                              $   (899)                          $   (684)
                                                      =========                          =========
Earnings per common share:

Income before extraordinary loss                      $   0.07                           $    0.06
                                                      ========                           =========

Net loss                                              $  (0.03)                           $  (0.02)
                                                      =========                          =========
</TABLE>


Note 7 - Commitments

OMI has agreed to acquire Marine  Transport  Lines,  Inc.  ("MTL"),  a privately
owned  company   specializing  in  U.S.  marine  and  transportation   services,
principally to the energy and chemical  industries for approximately  $5,000,000
payable in common stock of the Company as constituted  prior to the  transaction
defined in the following paragraph plus a number of additional shares sufficient
to give the owners of MTL 30 percent of the shares of the Company as constituted
following that transaction.

In connection  with the acquisition of MTL, OMI plans to spin off, as a tax free
distribution  to  shareholders,  a subsidiary  owning and  operating its foreign



                                      -9-
<PAGE>

assets ("Foreign OMI"). Foreign OMI will retain the OMI name and will be managed
by OMI's current  management.  The combined OMI-MTL entity ("Domestic") will use
the MTL name and will be managed by MTL's current management. Upon completion of
the acquisition and spinoff (the "transaction"),  holders of OMI shares prior to
the transaction will own approximately  two-thirds of the outstanding  shares of
Domestic, as well as substantially all outstanding shares of Foreign OMI. Former
MTL shareholders will hold approximately  one-third of the outstanding shares of
Domestic.

The  transaction is subject to a number of conditions,  including the receipt by
OMI of a favorable  private letter ruling from the Internal  Revenue Service and
OMI  shareholder  approval.  OMI filed a request for a private  letter ruling in
September  1997, and the closing of the  transaction is expected to occur in the
first part of 1998 after the ruling is received.


The Company has entered  into  contracts  for the  construction  of four Suezmax
tankers  at a cost of  approximately  $54  million  per  vessel  (three  will be
delivered in 1998 and one will be delivered in the first quarter of 1999).

Note 8 - Joint Venture Information

In September  1997,  the  Company's  49.9  percent  owned joint  venture  Mosaic
Alliance  Corporation  ("Mosaic")sold  a  vessel  to one of  its  joint  venture
partners at a loss, of which OMI's proportionate share was $5,105,000. Mosaic is
in the process of acquiring its majority shareholder's interest in this venture,
at which time, it will become a wholly owned subsidiary of OMI.













                                      -10-
<PAGE>


Item 7.  Management's  Discussion  and  Analysis  of Results of  Operations  and
         Financial Condition

Overview

OMI Corp. ("OMI" or the "Company") is one of the largest, measured by deadweight
tons ("dwt"),  publicly  traded bulk  shipping  companies  headquartered  in the
United  States.  OMI provides sea borne  transportation  services for crude oil,
petroleum  products and, to a much lesser extent,  through joint  ventures,  dry
bulk cargoes  (primarily  iron ore, coal and grain).  The charter rates that the
Company is able to obtain for its vessels are  determined in highly  competitive
markets.   The  industry  is  cyclical,   experiencing   significant  swings  in
profitability  and asset values  resulting from changes in the supply and demand
for vessels.

The Company  currently  has a  wholly-owned  foreign  flag fleet  consisting  of
thirteen  product  carriers and six crude oil tankers  (five  Suezmaxes  and one
Aframax).  Additionally,  the  foreign  fleet  consists of three  vessels  owned
approximately  50 percent with joint  venture  partners  and three  chartered-in
tankers (only two vessels were  chartered-in at September 30, 1997). The Company
has entered into  contracts for the  construction  of four Suezmax  tankers at a
cost of  approximately  $54 million per vessel  (three will be delivered in 1998
and one will be delivered in the first  quarter of 1999).  The current  domestic
fleet consists of three product  carriers,  one  chartered-in  crude carrier and
four foreign flag tankers  chartered-in  by OMI  Petrolink,  a subsidiary in the
offshore lightering business.

Net income for the nine months  ended  September  30, 1997 was $12.8  million or
$0.30 per share  compared to $3.3 million or $0.11 per share for the nine months
ended  September 30, 1996.  Included in net income of $12.8 million for the nine
months ended September 30, 1997 is income of $13.8 million, net of tax, from the
cumulative  effect of a change in accounting  principle,  $4.2 million in losses
from  sale of  joint  venture  vessels,  and gain on sale of  assets-net  of $.1
million.  Included  in net  income of $3.3  million  for the nine  months  ended
September 30, 1996 is an extraordinary loss of $2.7 million,  loss from the sale
of a joint venture vessel of $.7 million and gain on sale of assets-net of $12.8
million.

Effective  January 1, 1997,  OMI  changed its method of  accounting  for special
survey and  drydock  expenses  from the accrual  method to the  prepaid  method.
Special  survey and drydock  expenses  had been accrued and charged to operating
expenses over the vessel's survey cycle, which was generally a two to three year
period.  Under the prepaid method, the Company  capitalizes its drydocking costs
and  amortizes  them over the period  through  the next  drydocking.  Management
believes the prepaid method better  matches costs with  revenues,  and minimizes
any significant  changes in estimates  associated  with the accrual method.  The
cumulative  effect  of  this  accounting  change  is  shown  separately  in  the
consolidated  statement of  operations  and resulted in income of $13.8  million
(net of income taxes of $7.4 million) or $0.32 per share.

The  Company has  implemented  several  strategies  since early 1996 in order to
return the Company to profitability:

     (i)  developed large and concentrated  fleets of handysize product carriers
          and Suezmax tankers.

          The Company  purchased two crude oil tankers,  three product carriers,
          is  building  four new  Suezmax  tankers  and  disposed of a Liquified
          Petroleum 


                                      -11-
<PAGE>

          Gas carrier ("LPG") which was not strategic to the Company's plan.



     (ii) managed the spot versus time charter mix of its vessels.

          OMI has maintained a mix of approximately half its product carriers on
          time  charters and had 73 percent of its crude oil tankers in the spot
          market  during the nine months ended  September  30, 1997.  Currently,
          more Suezmax  tankers  have been  operating in the spot market to take
          advantage of the expected rise in rates.

     (iii)reduced  vessel  operating  and certain  corporate  overhead  costs by
          reducing the U.S. fleet.

          The Company has reduced U.S. flag vessel operating expenses (see (v)),
          and reduced  corporate  overhead costs,  such as professional fees and
          salaries and employee  benefit costs resulting from a reduction in the
          number of employees.

     (iv) reduced its reliance on joint ventures which own vessels.

          After its partner  requested  to withdraw  from a joint  venture,  OMI
          acquired its partners'  interests in a 49 percent owned joint venture,
          Wilomi,  Inc., in December  1996.  Similarly,  after  another  partner
          requested to withdraw from a joint venture, a 49.9 percent owned joint
          venture, Mosaic Alliance Corporation ("Mosaic"),  is in the process of
          concluding  certain  transactions  by December 1997 in  preparation to
          acquire its partners' majority interest in the joint venture. OMI will
          then only have three vessels owned in joint ventures.

     (v)  refocused its  operations  from the U.S.  flag domestic  market to the
          international tanker market.

          In 1996 and 1997, OMI disposed of seven U.S. Flag vessels.  In January
          1997,  the  Company  completed  the  sale  and  leaseback  of the  OMI
          Columbia,  ned joint venture Mosaic Alliance  Corporation sold largest
          U.S.  flag vessel for $49 million.  Under the terms of the lease,  OMI
          continues as the operator and time charterer of the vessel.

          On September 16, 1997,  OMI  announced,  as a final step to becoming a
          purely  international  fleet  that  OMI and  Marine  Transport  Lines,
          Inc.("MTL"), a privately owned company specializing in U.S. marine and
          transportation services, had reached a definitive agreement for OMI to
          acquire MTL for  approximately  $5 million  payable in common stock of
          the  Company  as  constituted  prior  to the  transaction  defined  as
          follows,  plus a number of  additional  shares  sufficient to give the
          owners of MTL 30 percent of the shares of the  Company as  constituted
          following  that  transaction.  In  connection  with ned joint  venture
          Mosaic Alliance Corporation sold acquisition of MTL, OMI plans to spin
          off, as a tax free  distribution to shareholders,  a subsidiary owning
          and operating  ned joint  venture  Mosaic  Alliance  Corporation  sold
          foreign assets ("Foreign  OMI").  Foreign OMI will retain the OMI name
          and will be managed by OMI's current management.  The combined OMI-MTL
          entity ("Domestic") will use the MTL name and will be managed by MTL's
          current  management.  Upon  completion of the acquisition and spin off
          (the  "transaction"),  holders of OMI shares prior to the  transaction
          will  own  approximately  two-thirds  of  the  outstanding  shares  of
          Domestic,  as well as substantially all outstanding  shares of Foreign
          OMI. Former MTL shareholders will hold 


                                      -12-
<PAGE>

          approximately  one-third of the  outstanding  shares of Domestic.  The
          transaction  is  subject  to a number  of  conditions,  including  the
          receipt by OMI of a favorable  private letter ruling from the Internal
          Revenue  Service and OMI shareholder  approval.  OMI filed the private
          letter  ruling in  September  1997 and closing of the  transaction  is
          expected to occur in early 1998 after the ruling is received.

     (vi) reduced interest expense on long-term debt.

          During 1996 and early 1997, the Company  improved its balance sheet by
          reducing  debt,  consequently  reducing  its  interest  expense  which
          historically has been a significant factor in the Company's  financial
          performance.  In July 1996, the Company  purchased $130 million of its
          Senior  Notes in a tender  offer  and the  debt  was  refinanced  with
          commercial  banks at more  favorable  rates.  Such  debt  was  reduced
          further by  approximately  $60 million of the net  proceeds of a $75.7
          million public offering of 11,500,000  shares of the Company's  common
          stock in the fourth  quarter of 1996, and by proceeds from the sale of
          the OMI  Columbia of $40  million in the first half of 1997.  In April
          1997,  the Company  again  refinanced  its  remaining  debt under more
          favorable  terms. In May 1997, debt of $16.9 million was paid upon the
          sale of the  vessel  Alta and that  facility  was  renegotiated.  (See
          Balance   Sheets  and   Liquidity   and  Capital   Resources-Financing
          Facilities).

Market Overview

The  product  carrier  market is the market  segment  which  transports  refined
petroleum products such as gasoline,  jet fuel,  kerosene,  naphtha and gas oil.
Average  freight rates in this market have increased in the first nine months of
1997 compared to the same period last year as a result of increasing  world fuel
consumption resulting from an improved economy. Additionally,  refinery capacity
is expanding in oil exporting  regions such as the Middle East and Latin America
but not in historically large consuming nations. Historically, earnings from the
product  carrier  fleet have been less  volatile  than earnings from the Suezmax
fleet.  Approximately  half of this fleet operates on time charter and the other
half operates in the spot market.  This mix of time charter and voyage  charters
further  stabilizes  earnings from OMI's product  carrier fleet.  Product tanker
rates have  softened  recently  due to higher  world oil stocks  compared to the
level a year ago and the relatively mild weather for this time of year. However,
it should be noted  that the  tanker  markets  typically  strengthen  during the
winter months as a result of seasonal oil demand.

Freight rates in the tanker markets  continued to improve in 1997 as a result of
increased demand for oil due to continuing world economic growth, coupled with a
marginal change in the supply of tankers since 1993. During July 1997,  however,
rates softened in the crude oil market as a result of the closing of the Dortyol
pipeline  which  resulted in the  instability in tanker rates due to competition
from vessels which transport oil from the pipeline. The pipeline reopened at the
end of the  third  quarter,  which  is  reflected  in the  increase  in rates in
September and the fourth quarter.  At the same time the Very Large Crude Carrier
("VLCC") market is also improving.  The  strengthening of the VLCC market in the
Pacific  region  benefits  the  Suezmax  market as every VLCC  removed  from the
competition in the Atlantic region results in cargoes for two Suezmax vessels.

The  Company's  Suezmax  fleet is one of the largest  independent  fleets in the
world.  OMI has  targeted  this  market  segment due to the  flexibility  of the
Suezmax  tankers to engage in long-haul and  short-haul  trades,  as well as the


                                      -13-
<PAGE>



growth  potential  in the crude oil market.  OMI  currently  operates six of its
Suezmax tankers,  including chartered-in vessels, in the spot market in order to
take  advantage of the expected  increase in the market.  Charters for the other
Suezmax tankers expire by the spring of 1998.

Results of Operations

For the Nine and Three Months Ended September 30, 1997 versus September 30, 1996

Results of  operations  of OMI include  operating  activities  of the  Company's
domestic and foreign vessels. The discussion that follows explains the Company's
operating  results in terms of net voyage revenue,  which equals voyage revenues
minus vessel and voyage  expenses,  because  fluctuations in voyage revenues and
expenses occur based on the nature of a charter. The Company's vessels currently
operate,  or have operated in prior years, on time,  bareboat or voyage ("spot")
charters.  Each type of charter  denotes a method by which revenues are recorded
and expenses are allocated. Under a time charter, revenue is measured based on a
daily or monthly rate and the charterer assumes certain operating expenses, such
as fuel and port charges.  Under a bareboat  charter,  the charterer assumes all
operating  expenses;  as a result, the revenue rate is likely to be lower than a
time charter. Under a voyage charter,  revenue is calculated based on the amount
of cargo carried,  nearly all expenses are for the ship owner's  account and the
length of the charter is one  voyage.  Revenues  therefore  may be higher in the
spot market.  Other factors affecting net voyage revenue for voyage charters are
waiting time between cargoes, port costs and bunker prices.

Voyage  revenue less voyage  expenses  (expenses  incurred to complete a voyage,
such as fuel,  port charges,  canal tolls etc.) can be otherwise  referred to as
time charter  equivalent  ("TCE") revenue.  TCE's are used to compare vessels on
time charters with vessels on spot charters from one period to another.

Vessel expenses included in net voyage revenue discussed above include operating
expenses for items such as crew payroll/benefits/travel, stores, maintenance and
repair,  drydock,  insurance  and other  miscellaneous  vessel  expenses.  These
expenses  are a function  of the fleet  size,  utilization  levels  for  certain
expenses and  requirements  under laws,  by  charterers  and Company  standards.
Insurance expense varies with the overall insurance market conditions as well as
the insured's loss record, level of insurance and desired coverage.

Voyage Revenues less Vessel and Voyage Expenses

Net voyage  revenues of $35.1  million for the nine months ended  September  30,
1997  decreased by $9.8 million from $44.9  million for the same period in 1996.
Net voyage  revenues of $10.3  million for the three months ended  September 30,
1997  decreased by $5.0 million from $15.3  million for the same period in 1996.
Changes in net voyage revenues for the nine and three months ended 1997 compared
to 1996 are  discussed as follows by the market  segments in which OMI primarily
operates.

Domestic

Domestic net voyage revenue decreased by $18.4 million to $(0.2) million for the
nine months ended  September 30, 1997, as compared to $18.2 million for the same



                                      -14-
<PAGE>


period in 1996.  Excluding two foreign flagged product carriers acquired in swap
transactions  involving  two domestic  owned  vessels,  net voyage  revenues for
domestic  operations for the first nine months of 1997 decreased  $22.0 million.
The two foreign  vessels will be contributed to Foreign OMI in conjunction  with
the spin off of the Company's subsidiary owning foreign assets.

Decreases of approximately  $9.1 million were  attributable to the seven vessels
disposed of during 1996.  Included in the $9.1 million  decrease is $4.4 million
in credits to drydock expense  relating to the reversal of drydock accruals (the
accrual  method of  accounting  for  drydock  was used in 1996) for the  vessels
disposed of in 1996.  Approximately  $4.5  million of the decrease in net voyage
revenues  was a result of two product  carriers  which were on time  charters in
1996 but were  laid up for an  aggregate  345  days in the  nine  months  ending
September 30, 1997. The third product  carrier's net voyage revenue decreased by
approximately $1.9 million because of 26 more offhire days in 1997 than in 1996.
The net voyage  revenue  earned by the OMI Columbia  declined  $4.5 million as a
result of the sale/leaseback of the vessel in January 1997 as well as additional
offhire incurred for repairs in 1997.

On January 31,  1997,  the OMI  Columbia,  a crude oil tanker  which  transports
Alaskan North Slope oil for a major oil company,  was sold and leased back under
a charter agreement terminating December 31, 2002. The vessel began operating on
a long-term  time  charter in the spring of 1996 and the length of this  charter
corresponds to the length of the lease.  OMI received $40 million in cash, which
was used for the  payment  of  corporate  debt,  (reducing  interest),  and a $9
million note for the vessel.  A gain of  approximately  $25 million was deferred
and is  currently  being  amortized  to the end of the lease term.  (see Balance
Sheet and Liquidity and Capital Resources-Cash Flows).

The three  remaining  vessels in the domestic fleet were on time charters in the
first half of 1996.  Two of these vessels were  redelivered in January and April
1997 having been on long-term time charters with the Military  Sealift  Command.
The third vessel was on a time charter in 1996 which ended in February 1997. Two
of these  vessels are  currently  laid up;  however,  the Company  continues  to
actively seek and evaluate all employment opportunities for these vessels.

Domestic net voyage revenue  decreased by $10 million ($11 million excluding the
two foreign flagged product carriers included in domestic  operating results) to
$(2.0)  million for the three months ended  September  30, 1997,  as compared to
$8.0 million for the same period in 1996. Decreases were primarily  attributable
to the three  vessels  disposed  of during  August  1996  decreasing  net voyage
revenue by $2.0 million  ($1.4 million of this decrease is attributed to drydock
accrual reversals).  A drydock accrual of $1.8 million was reversed for a vessel
which was in lay-up in anticipation of its sale in December 1996.  Additionally,
decreases  in net voyage  revenue  were due to an aggregate of 184 idle days for
the two product  carriers  which were laid up for the entire 1997 third quarter.
Decreases in net voyage  revenues  attributable  to the OMI  Columbia  were $3.3
million.

Foreign
Net voyage  revenue  earned by the foreign fleet  increased  $8.7 million ($12.2
increase  including two foreign flag vessels acquired by domestic  companies) to
$35.3 million for the nine months ended September 30, 1997, as compared to $26.6
million for the same period in 1996. A decrease of $1.4  million  relates to the
sale of an LPG which was disposed of in March 1997.

Net voyage  revenues  increased  $5.0 million ($6.0  increase  including the two
vessels  acquired by domestic  companies)  to $12.3 million for the three months



                                      -15-
<PAGE>


ended  September  30,  1997,  as compared to $7.3 million for the same period in
1996.  A decrease  of $0.5  million  relates to the sale of the LPG in the first
quarter of 1997.

Product Carrier Fleet
The product  carrier fleet consists of thirteen  vessels in 1997 ( including two
vessels acquired by domestic  companies) as compared to ten vessels in 1996. The
three additional  vessels  purchased in 1996 and 1997 accounted for $4.9 million
of the increase in net voyage revenue. With respect to the remaining ten product
carriers, TCE's, in the aggregate, remained relatively unchanged during the nine
months ended September 30, 1997 as compared to the same period in 1996.

Net voyage  revenues  for the product  carrier  fleet for the three months ended
September  30, 1997  increased  $1.8 million due to earnings  from three product
carriers  purchased in 1997, as well as lower vessel operating expenses incurred
in the third quarter of 1997 compared to the same period in 1996.


Crude Tanker Fleet
In the  period  ending  September  30,1997  the  crude  fleet  consisted  of six
wholly-owned  vessels and two chartered-in vessels of which five operated in the
spot market.  In 1996, OMI owned six vessels and chartered-in  one vessel,  with
five of  these  vessels  operating  in the  spot  market.  Net  voyage  revenues
generated by the crude  tanker  fleet  increased  primarily  for three  reasons,
first,  by $6.5 million due to the  acquisition  of the Alta and the Tanana (two
Suezmax tankers in which the Company  acquired ned joint venture Mosaic Alliance
Corporation  sold  partner's  interest on December 30,  1996),  second,  by $1.6
million  as a result of the sale of a vessel  operating  at a loss in 1996,  and
third, from improved TCE's resulting from better market conditions in 1997.

Net voyage  revenues  from the crude  tanker fleet  increased  $1.8 million as a
result of earnings from the acquisition of Alta and Tanana. Alta's earnings have
declined  in the third  quarter  compared  to the second  quarter of 1997 as the
Company  now  incurs  charter  hire  expense  related  to the May 1997  sale and
leaseback  of the  vessel.  Suezmax  rates  began to  increase in the late third
quarter as a result of the  reopening of the Dortyol  pipeline  which was closed
for the majority of the quarter,  in addition to improvement in rates  resulting
from the strengthening of the VLCC market.

Other Operating Expenses
The Company's operating expenses, other than vessel and voyage expenses consists
of depreciation and amortization and general and  administrative  expenses.  For
the nine months ended September 30, 1997, these expenses  decreased $1.3 million
to $33.9  million,  from $35.2 million for the same period in 1996.  The primary
reason for the  reduction  was a net  decrease in  depreciation  expense of $2.2
million due to the sale of eight vessels  offset in part by the purchase of five
vessels between 1996 and 1997. General and administrative  expenses increased by
$.9 million for the nine months ended  September  30, 1997  compared to the same
period in 1996.

For the three months ended  September 30, 1997,  these  expenses  increased $0.2
million to $11.9 million, from $11.7 million for the same period in 1996.

Other Income (Expense)
Other  income  (expense)  consists of gain on disposal of  assets-net,  interest
expense-net,  and minority  interest in income of subsidiary.  Net other expense


                                      -16-
<PAGE>


decreased by $1.6 million for the nine months ended  September 30, 1997 compared
to the same period in 1996.  Interest  expense - net  decreased by $11.6 million
during the nine months ended September 30, 1997,  compared to the same period in
1996 due to  decreases of $88 million in the average  debt  outstanding  of $191
million for the nine months ended  September 30, 1997,  compared to $279 million
for the nine months ended  September  30,  1996.  The average  interest  rate of
7.3927  percent for the nine months ended  September  30, 1997 was less than the
average  rate of 8.867  percent for the nine months  ended  September  30, 1996.
Decreases of $1.8 million in interest  expense-net  during the nine months ended
September 30, 1997,  relate to  capitalized  interest on four vessels  currently
under construction.  Decreases in Net other (expense) income were offset in part
by decreases in the gain on disposal of  assets-net of $11.9 million in the nine
months ended September 30, 1997. This decrease resulted  primarily from the gain
on sale of Petrolink  workboats of $9.7 million in September 1996 offset in part
by the gain on sale of the General of $1.0 in the first quarter of 1997.

Net other (expense)  income increased by $3.2 million for the three months ended
September  30, 1997  compared to the same period in 1996.  Decreases  in gain on
disposal of assets-net  of $9.2 million  resulted from the sale of the Petrolink
workboats  in the third  quarter in 1996.  Increases  in Net other  expense were
offset by  decreases  in interest  expense of $4.7  million  resulting  from the
refinancing of the Senior Notes in 1996,  lower  principal  balance on mortgaged
debt in 1997, payment of debt from vessel sales, and capitalized interest.

Provision (Benefit) for Income Taxes
The income tax  provision  of $1.1  million  and  $21,000 for the nine and three
months ended  September  30, 1997,  respectively,  varied from  statutory  rates
primarily  because  deferred  taxes are not recorded for equity in operations of
joint ventures,  net of dividends  declared,  other than Amazon Transport,  Inc.
("Amazon") and White Sea Holdings,  Ltd.  ("White Sea") as management  considers
such earnings to be invested for an indefinite period.

Equity in Operations of Joint Ventures
Equity in  operations  of joint  ventures  decreased  by $1.2  million  to $(.1)
million in the first nine months of 1997  compared to $1.1  million for the same
period of 1996. The decrease in equity was primarily attributable to the loss on
sale of a vessel in September  1997,  owned by Mosaic,  of  approximately  $10.2
million (OMI's  portion of the loss was  approximately  $5.1 million)  offset in
part by the gain on the sale of a vessel of $1.9 million  (OMI's  portion of the
gain was approximately  $0.9 million) in the second quarter of 1997. In addition
Mosaic had no interest expense in 1997 as all debt was repaid in 1996. Mosaic is
in the  process of  wrapping up its  business  and will be acquire its  majority
shareholder's  interest by year end. Other  increases in equity in operations of
joint  ventures  related  to Amazon,  a 49 percent  owned  joint  venture  which
operates one crude oil tanker, the Settebello. The equity in earnings for Amazon
increased  by $3.2 million in the first nine months of 1997 as compared the same
period in 1996. The Settebello was in drydock for 92 days in 1996 which resulted
in  both a lack  of  earnings  and  additional  drydock  expense.  Also,  equity
increased by $1.3  million  from White Sea  Holdings,  Inc.  ("White  Sea") as a
result of 66 offhire days in 1996  related to  drydocking  of the vessel.  These
increases  were offset by  decreases  in equity in  operations  of Wilomi,  Inc.
("Wilomi") which was not a joint venture of the Company in 1997.

In accordance  with the Company's  plan to decrease its  participation  in joint
ventures,  on December 30,  1996,  the interest in Wilomi owned by a partner was
acquired by the venture, and Wilomi became a 100 percent owned subsidiary of OMI
with its  earnings  consolidated  in OMI's  results.  The  decrease in equity in



                                      -17-
<PAGE>


operations  of joint  ventures  attributable  to Wilomi was $1.5 million for the
nine months ended September 30, 1997.

Equity in operations of joint ventures  decreased $3.9 million to $(3.8) million
in the third  quarter of 1997  compared  to $.1  million  for the same period of
1996.  The decrease in equity was primarily  attributable  to the Company's $5.3
million equity in the loss on the sale of a vessel by Mosaic,  offset in part by
increases in equity of $1.0 million in Amazon due to reduced drydock expenses in
1997.

Balance  Sheet

In 1997 the  Company  sold and  leased  back the OMI  Columbia  and the Alta for
approximately  $49 and $40  million,  respectively.  The  gain on sale of  these
vessels,  aggregating  approximately $40.4 million has been deferred and will be
credited  to  income  as an  adjustment  to lease  expense  over the term of the
leases.  At  September  30,  1997,  the balance of the  deferred  gain was $37.6
million.

The  cumulative  effect of the change in  accounting  principle as of January 1,
1997 on the Company's  balance sheet  increased  total assets by $11.3  million,
decreased total  liabilities by $2.5 million and increased  total  stockholders'
equity by $13.8.

Liquidity and Capital Resources

Cash Flows
Cash and cash equivalents of $23.3 million at September 30, 1997 decreased $24.6
million from cash and cash  equivalents  of $47.9  million at December 31, 1996.
The  Company's  working  capital of $14.5 million  decreased  $32.7 million from
working capital of $47.2 million at December 31, 1996.  Current assets decreased
$50.1  million  primarily  due to the  decrease  in cash  and  cash  equivalents
(explained below) and a decrease of $34.4 million pertaining to two vessels held
for sale at December 31,  1996.  Current  liabilities  decreased  $17.5  million
primarily  due to the  decrease  of  $13.4  million  of  current  maturities  of
long-term debt which was refinanced  (See Financing  Facilities).  Total debt to
capitalization was 44.8 percent at September 30, 1997,a decrease of 21.1 percent
as compared to the ratio of 63.9 percent at December 31, 1996.

Net cash  provided  by  operating  activities  increased  $19.8  million to $0.6
million for the nine months ended  September  30, 1997 compared to net cash used
by operating activities of $19.2 million for the nine months ended September 30,
1996. The increase was primarily attributable to the payment of OMI Hudson lease
termination  cost,  which was a one time charge of $25 million ($22 million cash
paid) in February 1996.

Cash used by financing  activities  was $56.2  million in 1997 compared to $12.2
million in the first nine months of 1996.  Payments on long-term  debt of $171.4
million were made in the first half of 1997.  Of this  amount,  $148 million was
used to prepay  debt  ($56.9  million  related to  prepayments  from the sale of
vessels  and  $91.1  related  to  refinancing)  and $23.4  million  was used for
scheduled debt repayments.  Proceeds received from refinanced debt and new debt,
including debt for the purchase of a vessel in April 1997,  was $109.1  million.
OMI drew down an additional  $5.0 million in September  1997 under its revolving
line of credit and repaid it in October 1997.

The Company operates in a capital-intensive industry and augments cash generated
by  operating  activities  with debt and sales of vessels that no longer fit the
Company's strategy.  Cash provided by investing  activities was $31.1 million in
1997 compared to $43.5 million in the nine months ended  September 30, 1996. Net


                                      -18-
<PAGE>


proceeds of $79 million were received in the first half of 1997 from the sale of
two vessels.  Of these proceeds,  $40 million in cash and a $9 million  interest
bearing note receivable was received from the sale of the OMI Columbia and $39.1
million was received for the Alta.  Proceeds of $11 million were  received  from
the sale of the  General  in March  1997 and were used to pay a  portion  of the
purchase  price of the  Severn for $18.7  million in April.  OMI also paid $32.1
million in  scheduled  construction  in progress  payments  for the four vessels
under  construction and approximately  $3.6 million in capital  expenditures for
improvements on various vessels.

Financing Facilities

During the first  quarter of 1997,  the  Company  negotiated  a new bank  credit
facility (the "Credit Facility") with its existing lenders.  The Credit Facility
provides  for a line of credit in the  amount of $133  million.  The  agreement,
which expires in March 2002,  provides for nine semiannual  payments;  the first
five are $5.5 million each,  the next four are $8.9 million each and the balance
is due at  maturity.  The Credit  Facility  contains  financial  covenants  with
respect to cash,  interest rate  coverage,  net worth and funded debt to equity.
Dividends paid in any year are limited to 50 percent of net income in that year.

During October 1997, the Company entered into a commitment with existing lenders
for two new  revolving  credit  facilities  in the amounts of $50.0  million and
$75.0 million.  These credit facilities are to be used to finance, on an interim
basis,  the acquisition of vessels and will be secured by such vessels.  Amounts
drawn on the new revolving credit  facilities are to be repaid no later than six
months after drawdown.  The credit facilities will bear interest at LIBOR plus a
margin  ranging from 55-80 basis points which is computed based on the Company's
funded debt to total  capitalization  ratio and interest coverage ratio. The new
credit facilities contain the same financial covenants as the facility described
above.  

The Company  believes  that the actions it has taken in the last year to improve
its liquidity and financial  position will give the Company greater  flexibility
to fund its vessel  acquisition  program and  finance its other cash needs.  The
Company  anticipates  Mosaic to have in excess of $30.0 million in cash after it
acquires the shares from its majority  shareholder  in December  1997.  The cash
will be used to complete  the  construction  payments for one of the new vessels
under contract which will be acquired by Mosaic.

Commitments

OMI and  affiliates of its joint  venture  partners act as  co-guarantors  for a
portion of the debt incurred by joint  ventures.  The portion of debt guaranteed
by the partners was  approximately  $17.5  million at September  30, 1997,  with
OMI's share of such guarantees being approximately $8.7 million.

The Company and its joint venture  partners  have  committed to fund any working
capital deficiencies that may be incurred by their joint venture investments. No
such deficiencies have been funded in the nine months ended September 30, 1997.

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 moderate
impact on operating expenses, drydocking expenses and corporate overhead.


                                      -19-
<PAGE>


                           PART II: OTHER INFORMATION

Item 1 - Legal Proceedings

                           None.

Item 2 - Changes in Securities

                           None.

Item 3 - Defaults upon Senior Securities

                           None.

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

                           None.

Item 5 - Other Information

                           None.

Item 6 - Exhibit and Reports on Form 8-K

  a.  Exhibits


      10.13    Acquisition Agreement dated as of September 15, 1997 by and among
               OMI Corp.,  Universal  Bulk  Carriers,  Inc.,  Marine Transport
               Lines, Inc.and the persons set forth on Exhibit A attached 
               hereto.

      10.14   OMI Corp. Amended and Restated, Annual Executive Incentive
              Compensation Plan.

      18      Deloitte & Touche LLP preferablility letter regarding change in
              accounting principle.

      27      OMI Corp. - Financial Data Schedule, dated September 30, 1997.

  b.  Reports on Form 8-K

                           None









                                      -20-
<PAGE>


                                   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 CORP.


--------------------------------------------------------------------------------
                                  (REGISTRANT)



Date:   NOVEMBER 14, 1997         By:    /s/ CRAIG H. STEVENSON, JR.
        ---------------------            -----------------------------
                                             Craig H. Stevenson, Jr.
                                             President, Chief Executive Officer
                                             and Director



Date:   NOVEMBER 14, 1997         By:    /s/ KATHLEEN C. HAINES
        ---------------------            -----------------------
                                                Kathleen C. Haines
                                                Vice President and
                                                Controller
























                                      -21-