EXHIBIT 10(iii)(i)

                                January 24, 2003

Mr. Ariel Recanati 176 East 71st Street, Apt. # 17B
New York, NY 10021

Dear Ariel:

This letter agreement and the General Release attached hereto set forth the
arrangement agreed to by Overseas Shipholding Group, Inc. ("OSG") and you in
connection with the termination of your employment with OSG.

1.    Your employment with OSG shall terminate as of January 31, 2003. Except as
      set forth herein, January 31, 2003 shall be the termination date for
      purposes of your participation in and coverage under all employee benefit
      plans and programs sponsored by OSG or its subsidiaries, including but
      not, limited to vacation accrual, tuition reimbursement, participation in
      any pension plan or savings plan, and eligibility for short-term and
      long-term disability benefits and life insurance.

2.    You shall resign as Senior Vice President of OSG and as an officer and
      director of any of its subsidiaries effective as of January 31, 2003.

3.    OSG shall pay you on the Effective Date (as defined in the penultimate
      paragraph of this letter agreement) the gross amount of $500,000.

4.    During the period from February 1, 2003 through April 30, 2003 (the
      "Transition Period"), you shall serve as a consultant to OSG and shall
      perform such

<PAGE>

      consulting services as the Chief Executive Officer of OSG shall reasonably
      request to assist OSG in effecting an orderly and efficient transition in
      respect of your duties as a Senior Vice President of OSG. Effective as of
      the end of the Transition Period, you shall cease to be a consultant of
      OSG. During the Transition Period, OSG shall pay you a consulting fee of
      $41,666.66 per month, payable in accordance with OSG's standard payroll
      practices. During the Transition Period, OSG shall pay or reimburse you,
      in accordance with the OSG's reimbursement and expense policies, for all
      reasonable expenses incurred by you at the request of the Chief Executive
      Officer of OSG in performing consulting services for OSG.

5.    Your aggregate accrued monthly retirement benefit under the Pension Plan
      for Employees of OSG Ship Management, Inc. ("OSGM") and the related
      Supplemental Employee Retirement Plans will reflect the additional
      credited service provided for you under the OSGM 2001 Transition Plan for
      the years 2001 and 2002 (i.e., a total of two years of credited service
      for each of the years 2001 and 2002). The amount payable under section 3
      of this letter agreement shall not be taken into account as compensation
      for 2003 for purposes of any pension or supplemental retirement plan
      benefits. The present value of amounts payable to you pursuant to the
      Supplemental Employee Retirement Plans (taking into account the provisions
      of this section 5) shall be paid to you in a lump sum as soon as
      practicable after the Effective Date.

6.    (a) OSG will make matching contributions on your behalf to OSG's 401(k)
      plan with respect to your compensation as an employee of OSG for January
      2003


                                       2
<PAGE>

      and with respect to the incentive compensation bonus paid to you pursuant
      to Section 10(i) of this letter agreement, all in accordance with OSG's
      401(k) plan. OSG shall also pay you the difference between $12,000 and the
      amount of matching contributions it makes pursuant to the preceding
      sentence within 30 days after it makes the last such matching
      contribution.

      (b) You do not have any accrued and unused vacation time.

7.    For a period of one year beginning February 1, 2003, you will be eligible
      to continue medical coverage under the OSGM medical benefits plan. You
      will be required to make the same contributions towards your continued
      medical coverage as you did as an active employee, and OSG shall pay the
      balance. This one-year period will run concurrently with your eligibility
      for benefits under the Consolidated Omnibus Budget Reconciliation Act
      ("COBRA"), and at the end of this period you will be eligible to continue
      coverage for the remainder of the COBRA period at your own expense.

8.    For a period of one year beginning February 1, 2003, OSG will provide you
      with life insurance benefits, comparable (with respect to level of
      benefits, terms and payment responsibility) to those life insurance
      benefits provided to you prior to January 31, 2003.

9.    On the Effective Date, OSG shall pay you $17,000 for automobile expenses.

10.   OSG shall pay you (i) an incentive compensation bonus that is comparable
      as a percentage of base salary in 2002 and in timing of payment to the
      incentive compensation bonuses paid to the other Senior Vice Presidents of
      OSG pursuant


                                       3
<PAGE>

      to OSG's incentive compensation plan for 2002, (ii) an incentive
      compensation bonus that is comparable as a percentage of base salary in
      2002 and in timing of payment to the incentive compensation bonuses paid
      to the other Senior Vice Presidents of OSG pursuant to OSG's incentive
      compensation plan for 2003, provided that your bonus shall be pro rated
      based on your length of service in 2003 (i.e. one month of service in
      2003), and (iii) a bonus that is comparable as a percentage of base salary
      in 2002 and in timing of payment to each other bonus, if any, paid in the
      future to the other Senior Vice Presidents of OSG in respect of periods
      ending prior to January 1, 2003.

11.   You currently hold stock options for 56,600 shares at $19.50 of which all
      but 11,320 are vested and exercisable; for 60,000 shares at $12.50, all of
      which are vested and exercisable; and for 90,000 shares at $14.625 of
      which all but 30,000 are vested and exercisable. Effective January 31,
      2003, all your options which are not yet vested will become fully vested
      and exercisable, except that no such options may be exercised prior to the
      Effective Date. Thereafter, all such options shall be subject to the terms
      and conditions of the applicable stock option plans, provided that such
      options shall remain exercisable until the first anniversary of the
      Effective Date.

12.   OSG shall provide you with the use of your current office and secretary at
      OSG's expense through March 31, 2003.

13.   Beginning at the end of March 2003, and for so long as such space is
      leased by OSG, OSG will make available to you and to persons assisting you
      in your work, for use by you and such persons as an office, the conference
      room located on the


                                       4
<PAGE>

      17th floor of 511 Fifth Avenue, New York, New York. You will be
      responsible to pay rent and all related occupancy expenses for this space
      at a cost equal to that which OSG would have paid for the space. You may
      notify OSG of your intention to vacate this space at any time on not less
      than 60 days prior written notice. You will not be responsible for any
      future rent or related occupancy expenses for this space after (i) such 60
      day period and (ii) you vacate such space.

14.   (a) You agree not to disclose any information, files, documents and other
      materials proprietary to OSG and not in the public domain which relate to
      OSG or its business and which are treated as confidential by OSG, its
      subsidiaries, affiliates or related companies, except (i) with the prior
      consent of OSG, or (ii) as otherwise required by law or legal process.
      Nothing in the preceding sentence shall be deemed to limit what you may
      discuss with the other directors of OSG.

      (b) For a period of one year beginning February 1, 2003, you agree not to
      use any proprietary or confidential information relating to OSG, its
      subsidiaries, affiliates or related companies ("Confidential Information")
      in any commercial activity in which you engage, whether as an officer,
      employee, director, owner, partner or otherwise, provided, however that
      Confidential Information shall not include any information which is or has
      been acquired by you other than only through your position as an officer
      or director of OSG, its subsidiaries or affiliates.

15.   Until such time as OSG files this document with the Securities and
      Exchange Commission, (i) except as may be required by law or legal
      process, OSG shall keep the terms of this letter agreement confidential
      and not disclose such terms to


                                       5
<PAGE>

      anyone other than to directors, officers, employees, attorneys, advisers,
      auditors and agents of OSG, its subsidiaries, affiliates and related
      companies, without your prior consent, each of whom shall be requested by
      OSG to maintain such information in confidence and (ii) you agree to keep
      the terms of this letter agreement confidential and not to disclose its
      contents to anyone, without OSG's prior consent, except members of your
      family (which shall include relatives up to your first cousins) and your
      attorney, financial consultant or other professional advisor, each of whom
      shall be requested by you to maintain such information in confidence.

16.   You agree not to make, participate in the making of, or encourage any
      other person to make, any statements, written or oral, which criticize,
      disparage, or defame the goodwill or reputation of OSG, its subsidiaries,
      affiliated or related companies, or any of their respective directors,
      officers and employees. OSG agrees not to make, participate in the making
      of, or encourage any employees or any other person to make, any
      statements, written or oral, which criticize, disparage, or defame your
      reputation.

17.   Before OSG issues any public announcement or press release regarding the
      termination of your employment, it shall provide you with a copy of the
      proposed announcement or press release and will consider any comments you
      may have about the announcement or press release.

18.   Any breach of the provisions of section 14, 15 and 16 hereof by you or any
      person to whom you have made a permitted disclosure of the terms of this
      letter agreement shall be considered a material breach of this letter
      agreement. In the


                                       6
<PAGE>

      event of such breach, and due to the difficulties in calculating the
      damages that might be sustained (directly or indirectly) as a result of
      such breach, you specifically consent to the entry of injunctive relief
      against you, in addition to any and all of OSG's remedies under the law,
      and you further agree that OSG may obtain the foregoing relief without the
      posting of a bond.

19.   The parties agree that a certain agreement dated as of March 24, 1999
      between OSG and you, as amended by an agreement dated June 21, 2002,
      relating to a Change of Control of OSG shall, as of the date hereof, be
      cancelled and deemed of no further force and effect.

20.   OSG, on behalf of itself and any affiliated companies and their past and
      present parents and subsidiaries, agree to forever release you, your wife,
      children, estate, agents, attorneys, heirs, executors, successors and
      assigns from any and all claims, demands, causes of action, controversies,
      agreements, promises and remedies, in connection with or in relationship
      to your capacity as (i) an employee or officer of OSG or any of its
      subsidiaries and (ii) a director of any subsidiary of OSG, which they may
      have as of the date hereof, whether known or unknown (collectively, the
      "Company Release") provided, however, that the Company Release shall not
      apply with respect to any conduct on your part which is fraudulent or
      illegal or otherwise violative of any applicable laws or rules or
      regulations issued under such laws.

21.   This letter agreement and the General Release contain the entire agreement
      between you and OSG and fully supersede any and all prior agreements or
      understandings with respect to the subject matter hereof and the terms and


                                       7
<PAGE>

      provisions of this letter agreement may not be modified or amended except
      in a writing signed by both parties.

22.   You have the right to consider fully the terms of this letter agreement
      for a period of up to twenty-one (21) days, and you are advised to consult
      with an attorney of your choosing in connection therewith and the General
      Release, before deciding whether or not to sign.

23.   You represent and warrant that (i) you have carefully read this letter
      agreement and the General Release in their entirety and you fully
      understand the significance of all of the terms and conditions hereof and
      the General Release, and (ii) you are signing this letter agreement
      voluntarily and of your own free will, and assent to all the terms and
      conditions contained therein.

24.   No waiver by either party of any breach by the other party of its
      obligations hereunder shall be deemed a waiver of any prior or subsequent
      breach. Except to the extent otherwise specifically provided herein, any
      waiver must be in writing and signed by you or an authorized officer of
      OSG, as the case may be.

25.   Nothing contained in this letter agreement or the General Release shall
      (a) affect your rights to compensation, reimbursement and indemnification,
      in your continued capacity as a director of OSG provided that (i) your
      rights to receive non-employee director fees from OSG shall begin on May
      1, 2003 and (ii) you shall not be eligible for an Initial Option under the
      1999 Non-Employee Director Stock Option Plan of OSG and the year of the
      first Annual Grant Date for you under such Plan shall be 2003, and (b)
      affect or limit your ability to perform your duties and obligations as a
      director of OSG.


                                       8
<PAGE>

26.   All payments made by OSG to you pursuant to this letter agreement shall be
      subject to appropriate deductions for FICA, Federal, State and local
      income taxes.

27.   This letter agreement and the General Release shall be governed by,
      construed and enforced in accordance with the laws of the State of New
      York applicable to contracts to be performed therein.

28.   This letter agreement and all the provisions hereof shall inure to the
      benefit of, and be binding upon, the successors, permitted assigns, heirs,
      executors and administrators of the parties hereto.

This letter agreement and the General Release shall not become effective until
the eighth (8th) day following your execution thereof (the "Effective Date"),
and you may revoke this letter agreement prior to that date by giving written
notice of such revocation to the undersigned, whereupon this letter agreement
and the General Release shall become null and void. Any revocation of the
General Release shall also be deemed to be a revocation of this letter
agreement.


                                       9
<PAGE>

If you agree to the foregoing, please so indicate by dating and signing both
enclosed copies of this letter agreement and of the General Release, and having
your signature on the General Release notarized. One copy of the letter
agreement and the General Release should be returned to the undersigned. The
second original of each is for you.

Sincerely,

OVERSEAS SHIPHOLDING GROUP, INC.


By: s/ ROBERT N. COWEN
    ----------------------------------
       Name:  Robert N. Cowen
       Title: Senior Vice President

I hereby agree to be bound by the terms and conditions of the above letter
agreement.


Date: January 28, 2003                          s/ARIEL RECANATI
                                    ------------------------------------------
                                                 Ariel Recanati


                                       10
<PAGE>

                                                                       EXHIBIT A

                                 GENERAL RELEASE

Reference is made to the letter agreement dated January 24, 2003 which I
countersigned on January ___, 2003, between Overseas Shipholding Group, Inc.
("OSG") and the undersigned, Mr. Ariel Recanati, residing at 176 East 71st
Street. Apt. #17B, New York, NY 10021 (herein referred to as the "Agreement"). I
hereby agree as follows:

      I, on behalf of myself, as well as my heirs, executors, administrators,
      successors and assigns, hereby irrevocably and unconditionally release and
      discharge OSG, OSG Ship Management, Inc., their predecessors and
      transferors and affiliated and related companies, all of their respective
      officers, directors, employees, agents, principals, advisors, parents, and
      subsidiaries, and each of their respective heirs, executors,
      administrators, successors and assigns (collectively, the "Company
      Released Parties" and each, a "Company Released Party"), from all claims,
      demands, causes of action, controversies, agreements, promises and
      remedies, in connection with or in relationship to the my capacity as an
      employee, officer or director of any of the Company Released Parties which
      I may have as of the date hereof, whether known or unknown, including
      under any statute, rule, order, law or ordinance, express or implied
      contract, public policy or otherwise (collectively, "Employee Claims").
      This General Release applies to all Employee Claims, including any and all
      Employee Claims relating to the terms and conditions of my employment with
      any of the Company Released Parties or the termination of my employment;
      any and all Employee Claims for discrimination on the basis of age,
      alienage, color, creed, disability, gender, handicap, marital status,
      national origin,

<PAGE>
General Release
Page 2


      race, religion, sex or sexual orientation; any and all claims arising
      under Title VII of the Civil Rights Act of 1964, the Age Discrimination in
      Employment Act, the Equal Pay Act, the Rehabilitation Act, the Americans
      with Disabilities Act, the New York State Human Rights Act, the New York
      City Human Rights Law, all as amended, and any other federal, state or
      local statute, ordinance, rule, regulation or order relating to employment
      and any and all Employee Claims for attorney's fees, costs or
      disbursements.

      I agree that I will not, from any source or proceeding, seek or accept any
      award or settlement with respect to any Employee Claim covered hereunder.
      In addition, except as otherwise prohibited by law, I represent and
      warrant that I will not sue or commence any proceeding (judicial or
      administrative), or participate in any action, suit or proceeding, against
      any of the Company Released Parties, with respect to any act, event,
      occurrence, or any alleged failure to act, released hereunder.

      Notwithstanding the foregoing, nothing herein shall be deemed to release
      the Company Released Parties in respect of my rights (i) under the
      Agreement including, but not limited to, to my rights pursuant to sections
      4 and 25 of the Agreement, (ii) to indemnification, in my capacity as a
      current or former director or officer of any of the Company Released
      Parties, under the by-laws and articles of incorporation of each Company
      Released Party, as in effect from time to time, or pursuant to
      indemnification policies maintained by one or more of the Company Released
      Parties, (iii) any unpaid salary, (iv) to reimbursement pursuant to the
      policies of any Company Released Party for expenses incurred by me prior

<PAGE>
General Release
Page 3


      to January 31, 2003 or pursuant to section 4 of the Agreement, and (v) to
      any benefits payable to me pursuant to any qualified pension plan
      maintained by the Company Released Parties.

      I represent and warrant that I have carefully read this General Release in
      its entirety; that I have had an opportunity to consider fully the terms
      of this General Release for twenty-one (21) days; that I have been advised
      by OSG in writing to consult with an attorney of my choosing in connection
      with this General Release; that I fully understand the significance of all
      of the terms and conditions of the Agreement and this General Release;
      that I have discussed it with my independent legal counsel, or I have had
      a reasonable opportunity to do so; that I have had answered to my
      satisfaction any questions I have asked with regard to the meaning and
      significance of any of the provisions of the Agreement and this General
      Release; and that I am signing this General Release voluntarily and of my
      own free will and I assent to all the terms and conditions contained in
      the Agreement and herein.

      I further acknowledge that after executing the General Release I have
      seven (7) days to revoke it by delivery of a Notice of Revocation to the
      Released Parties, directed to the attention of Mr. Robert Cowen, prior to
      the eighth (8th) day after execution and delivery by me of the General
      Release. I understand that if so revoked by me, this General Release and
      the Agreement shall be deemed to be null and void.

<PAGE>
General Release
Page 4


      IN WITNESS WHEREOF, I have executed this General Release this ____ day of
January 2003.


---------------------
Ariel Recanati

STATE OF NEW YORK     )
                      ) ss.:
COUNTY OF NEW YORK    )

On this day of January, 2003, before me personally came Ariel Recanati, to me
known and known to me to be the person described in and who executed the
foregoing General Release, and he duly acknowledged to me that he executed the
same.

                         ------------------------------
                                 Notary Public