SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-6479-1

OVERSEAS SHIPHOLDING GROUP, INC.
(Exact name of registrant as specified in its charter)

        Securities registered pursuant to Section 12(g) of the Act: NONE

        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 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 ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the     Act). Yes ý    No o

        The aggregate market value of the Common Stock held by non-affiliates of the registrant on June 30, 2004, the last business day of the registrant's most recently completed second quarter, was $1,537,119,787, based on the closing price of $44.13 per share on the New York Stock Exchange on that date. (For this purpose, all outstanding shares of Common Stock have been considered held by non-affiliates, other than the shares beneficially owned by directors, officers and certain 5% shareholders of the registrant; certain of such persons disclaim that they are affiliates of the registrant.)

        As of February 22, 2005, 39,439,618 shares of Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the registrant's definitive proxy statement to be filed by the registrant in connection with its 2005 Annual Meeting of Shareholders are incorporated by reference in Part III.

TABLE OF CONTENTS

PART I

ITEM 1.    BUSINESS

Overview

        Overseas Shipholding Group, Inc. ("OSG" or the "Company") is one of the world's leading independent bulk shipping companies engaged primarily in the ocean transportation of crude oil and petroleum products. As of December 31, 2004, the Company's modern fleet consisted of 61 oceangoing vessels that aggregate 11.2 million deadweight tons, of which 51 vessels operated in the international market and ten vessels operated in the U.S. Flag market. OSG is the only major U.S. shipping company with significant operations in both the international and U.S. Flag markets. A glossary of shipping terms (the "Glossary") that should be used as a reference when reading this Annual Report on Form 10-K begins on page 22. Capitalized terms that are used in this Annual Report are either defined when they are first used or in the Glossary.

        On January 20, 2005, OSG acquired Stelmar Shipping Ltd. ("Stelmar"), a leading international provider of petroleum product and crude oil transportation services. Stelmar's modern fleet consists of 40 vessels, aggregating 2.3 million deadweight tons. As a result of the acquisition, OSG became the second largest publicly traded oil tanker company measured by number of vessels and third largest measured by deadweight tons. The acquisition of Stelmar is a transforming event for the Company. The acquisition provides OSG with multiple advantages:

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The addition of the Stelmar fleet will result in OSG being a global leader in both crude and product tanker segments.



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Stelmar's strategic focus of deploying the majority of its vessels on time charters will reduce OSG's predominantly spot market exposure for its VLCCs and Aframaxes.



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The combined companies' customer relationships will span both the crude and the product markets, thus enhancing cross-selling opportunities for the Company.



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The acquisition will provide OSG with the scale to increase operational leverage, while enhancing OSG's transportation offerings to charterers.



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OSG's position as one of the leading shipping companies in the Aframax market will be bolstered.

        Information concerning the Company's business is provided in this Annual Report as of the end of 2004 and, in certain cases, as of the date of this Annual Report (unless noted otherwise) in order to reflect the Stelmar acquisition.

        In July 2004, a joint venture in which the Company has a 49.9% interest, acquired four double hull V Pluses (defined in Glossary on page 22). The four V Pluses, which are the only double hull V Pluses in the world, are capable of carrying up to 3.2 million barrels of crude oil, more than 50% greater than VLCCs, at a lower delivered cost per barrel. These four vessels incorporate many design features intended to extend their trading lives to 40 years and enhance their safety and efficiency in the long haul crude trade.

        In November 2004, the Company and Qatar Gas Transport Company Limited (Nakilat) formed a joint venture that ordered four 216,000 cbm LNG Carriers for an aggregate purchase price of $908 million. The LNG Carriers will, upon delivery in 2007 and 2008, commence 25-year time charters (with options to extend) to Qatar Liquefied Gas Company Limited (II). The vessels are intended for use on a new project to transport liquefied natural gas from Qatar to the United Kingdom. These state-of-the-art vessels will have twin slow-speed diesel engines and on-board reliquification capability to handle cargo boil-off.

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        In October 2004, Congress passed the American Jobs Creation Act of 2004 which, for taxable years beginning in 2005, reinstates the indefinite deferral of United States taxation on foreign shipping income until such income is repatriated to the United States as dividends. From 1987 through 2004, the Company's foreign shipping income was subject to current taxation. The new tax law effectively restores the pre-1987 tax treatment of foreign shipping income beginning in 2005 and places the Company's international fleet on a level playing field with its offshore competitors for the first time since 1986 (see "Taxation of the Company" on page 16).

        In February 2005, the Company signed four agreements with the Maritime Administrator of the U.S. Department of Transportation pursuant to which, in October 2005, it will enter three U.S. Flag Product Carriers and one U.S. Flag Pure Car Carrier into the U.S. Maritime Security Program for ten-year terms (see "U.S. Flag Fleet Operations" on page 10). This transaction coupled with its earlier acquisition of two U.S. Flag Product Carriers in April 2004 marks the Company's first major investment in the U.S. Flag business in a number of years.

        Of the 61 vessels in OSG's fleet at the end of 2004, 56 are tankers engaged in the oil transportation business, of which 49 are Foreign Flag tankers that operate in the international market and seven are U.S. Flag tankers that operate in the U.S. Alaskan and coastwise trades. The Company's five other vessels are engaged in the transportation of dry bulk cargo. Two are chartered-in Foreign Flag Dry Bulk Carriers that operate in the international market, two are chartered-in U.S. Flag Dry Bulk Carriers that operate in the U.S. foreign aid trade, and one is a U.S. Flag Pure Car Carrier. Of the Company's 49 Foreign Flag tankers, four are V Pluses (all of which are owned by a joint venture in which the Company has an interest of 49.9%), 21 are VLCCs (including one vessel owned by a joint venture in which the Company has an interest of 30% and seven which are chartered-in with the Company having a 100% interest in one of these vessels and an average participation interest of 37% in the six other vessels), one is a Suezmax, 17 are Aframaxes (including one vessel owned by a joint venture in which the Company has a 50% interest and three of which are chartered-in with the Company having an average participation interest of 58%) and six are Product Carriers. The Marshall Islands is the principal flag of registry of the Company's Foreign Flag vessels. The Company's U.S. Flag tankers consist of three tankers engaged in the transportation of Alaskan crude oil ("U.S. Flag Crude Tankers") and four Product Carriers.

        The Company charters its vessels either for specific voyages ("voyage charters") at spot rates or for specific periods of time ("time charters") at fixed monthly amounts. From time to time, the Company may charter out its vessels on bareboat charters. Under such bareboat charters, the ships are chartered out for specific periods of time (generally medium or long-term) during which they are manned and operated by our customers.

        In recent years, over 85% of the Company's shipping revenues have been generated by the transportation of crude oil and petroleum products. The balance of the Company's revenues have been derived from the transportation of dry bulk cargoes, primarily grain, coal, and iron ore. The transportation of crude oil accounted for all of the operating income of the Company's joint ventures in each of 2004, 2003 and 2002. The Company's customers include many of the world's largest oil companies.

        Voyage charters constituted 85% of the Company's Time Charter Equivalent revenues in 2004, 79% in 2003 and 70% in 2002. Accordingly, the Company's shipping revenues are significantly affected by prevailing spot rates for voyage charters in the markets in which the Company's vessels operate. Spot market rates are highly volatile. Rates are determined by market forces such as local and worldwide demand for the commodities carried (such as crude oil or petroleum products), volumes of trade, distances that the commodities must be transported, and the amount of available tonnage both at the time such tonnage is required and over the period of projected use. Seasonal trends greatly affect world oil consumption and consequently tanker demand. While trends in consumption vary with season,

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peaks in tanker demand quite often precede seasonal consumption peaks as refiners and suppliers try to anticipate consumer demand. Seasonal peaks in oil demand are principally driven by increased demand prior to Northern Hemisphere winters, as heating oil consumption increases, and increased demand for gasoline prior to the summer driving season in the U.S. Available tonnage is affected over time, by the volume of newbuilding deliveries, the removal (principally through scrapping) of existing vessels from service, and by the greater efficiency of modern tonnage. Scrapping is affected by the level of freight rates, by the level of scrap prices and by international and U.S. governmental regulations that require the maintenance of vessels within certain standards and mandate the retirement of tankers lacking double hulls.

        A major portion of the Company's U.S. Flag fleet is on time or bareboat charter, providing a significant and predictable level of earnings, which is not subject to fluctuations in spot-market rates. The Company's U.S. Flag Crude Tankers are on bareboat charters extending for the remaining useful lives of such vessels with remaining terms ranging from six months to more than one year. Two of the Company's four U.S. Flag Product Carriers are operating on charter arrangements extending through the end of their useful lives. The other two U.S. Flag Product Carriers are operating on time charters that extend to December 2005. The Company's U.S. Flag Pure Car Carrier is operating on a time charter that extends through late 2007. In the Company's international fleet, one VLCC was operating on a time charter at December 31, 2004 that ended in February 2005, the Suezmax is operating under a charter arrangement that extends to June 2005 and two of the Handysize Product Carriers are operating on time charters that extend to February and October 2005. OSG's two Foreign Flag Dry Bulk Carriers commenced three-year time charters in early 2004, at which time these vessels were withdrawn from the pool of Capesize vessels in which they had participated since 2000. In the aggregate, time charter and bareboat charter revenues constituted 15% of the Company's TCE revenues in 2004, 21% in 2003 and 30% in 2002.

        In the international market, the Company has one of the industry's most modern and efficient fleets. As of December 31, 2004, the average age of the Company's four V Pluses was 2.3 years, the 21 VLCCs was 5.4 years and the 17 Aframaxes was 6.5 years. In contrast as of the end of 2004, the average age of the world fleets of VLCCs and Aframaxes was 8.7 years and 10.2 years, respectively. At a time when major customers are demonstrating a clear preference for modern tonnage based on concerns about the environmental risks associated with older vessels, more than 97% (based on deadweight tons, weighted to reflect the Company's interest in chartered-in vessels and vessels owned jointly with others) of OSG's Foreign Flag tanker fleet is double hull or double sided. The young age of the Company's VLCC and Aframax fleets and the Company's technical management expertise has resulted in minimal service disruptions for these vessels.

        To increase vessel utilization and thereby revenues, the Company participates in commercial pools with other owners of modern vessels. By operating a large number of vessels as an integrated transportation system, such pools offer customers greater flexibility and a higher level of service while, at the same time, achieving improved scheduling efficiencies for vessel owners. In December 1999, the Company and other leading ship owning companies formed Tankers International LLC to pool the commercial operation of their modern VLCCs. As of December 31, 2004, Tankers managed 41 VLCCs. The Company also has an Aframax pooling arrangement that consisted of 36 Aframaxes as of December 31, 2004, which generally trade in the Atlantic Basin, North Sea and the Mediterranean. Both of these pools negotiate charters with customers on behalf of the Company, primarily in the spot market. The size and scope of these pools enable them to enhance utilization rates for pool vessels and generate higher effective TCE revenues than are otherwise obtainable in the spot market.

        In recent years, the Company has materially reduced vessel operating costs. The Company has reduced organizational layers to streamline decision making, transferred functions to lower-cost areas, outsourced functions where appropriate, and renegotiated service and supply contracts. Through fully integrated shoreside and shipboard automation, the Company has been able to improve the speed and

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quality of information provided to its customers. All aspects of vessel operations are continuously reviewed to ensure that the Company's vessels conform with best industry practices.

        While the Company's ability to attract and maintain customers is significantly affected by the competitiveness of the rates it charges, OSG has sought to distinguish itself through its emphasis on service, safety and reliability. Through its customer-focused business strategy, the Company is committed to providing comprehensive transportation solutions for its customers' bulk shipping challenges. As a result, the Company has successfully maintained a number of long-term, close customer relationships.

        The Company also believes that the strength of its balance sheet, and the financial flexibility that it affords, distinguishes it from many of its competitors. At December 31, 2004, the Company's liquidity adjusted debt to capital ratio stood at 15.0% compared with 42.6% at December 31, 2001. For this purpose, liquidity adjusted debt is defined as long-term debt reduced by cash, marketable securities and tax adjusted balance in the Capital Construction Fund. The Company's liquidity adjusted debt to capital ratio has decreased significantly even as OSG has made investments in joint ventures and vessels of more than $590 million in the last three years. Giving pro forma effect to the acquisition of Stelmar, which the Company acquired for a total purchase price of approximately $1.35 billion including the assumption of Stelmar's debt, and proceeds from the sale of five Product Carriers in January 2005, the liquidity adjusted debt to capital ratio as of December 31, 2004 would have increased to approximately 50%.

        As of December 31, 2004, the Company had 1,696 employees: 1,530 seagoing personnel and 166 shoreside staff. The Company has collective bargaining agreements with two different maritime unions covering 128 seagoing personnel employed on the Company's U.S. Flag vessels. These agreements are in effect through June 15, 2005 with one of the unions and June 15, 2006 with the other union. Under the collective bargaining agreements, the Company is obligated to make contributions to pension and other welfare programs. OSG believes that it has a satisfactory relationship with its employees.

Acquisition of Stelmar

        On January 20, 2005, OSG completed its acquisition of Stelmar. Accordingly, the operating results of the Stelmar fleet will be reflected in the Company's consolidated financial statements commencing January 21, 2005. Stelmar's 40 vessel fleet consisted of 24 Handysize Product Carriers (15 of which are owned and nine of which are bareboat chartered in), 13 owned Panamaxes and three Aframaxes (one of which is owned and two of which are bareboat chartered in). All of the owned vessels and five of the chartered-in vessels are double hulled, and the remaining six chartered-in vessels are double sided. Thirty-three of Stelmar's 40 vessel fleet are currently employed on time charters that expire between March 2005 and July 2009. The addition of Stelmar's fleet will increase the Company's revenue days by approximately 13,700, of which 60% were fixed as of January 31, 2005.

        As of January 31, 2005, the Company's combined Foreign Flag fleet consisted of 90 Foreign Flag vessels totaling 12.9 million deadweight tons (giving effect to the sale of the Diane in January 2005). The combined Foreign Flag tanker fleet is among the youngest fleets in the industry, and 97% (based on deadweight tons, weighted to reflect the Company's interest in chartered-in vessels and vessels owned jointly with others) of the vessels are double-hulled or double-sided. As of January 31, 2005, the average ages of OSG's Aframax, Panamax and Handysize fleets were 6.8 years, 4.4 years and 9.7 years, respectively, compared with world fleet averages as of December 31, 2004 in these sectors of 10.2 years, 13.9 years and 13.8 years, respectively.

        As of January 31, 2005, five of the 13 Panamaxes participated in the Stelcape Limited ("Stelcape") pool, a pool of 12 double hull Panamaxes formed in April 2004. Of the remaining seven Panamaxes, four are chartered in by the other pool partner from the Company and three are chartered-in by the

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other pool partner from third parties. Stelcape's vessels generally trade between South and Central America, the U.S. and Caribbean.

        As of January 31, 2005, giving effect to the Company's acquisition of Stelmar, the Company had 2,775 employees: 2,533 seagoing personnel and 242 shoreside staff, primarily in five offices around the world (New York, Newcastle (U.K.), Athens, London and Singapore).

Forward-Looking Statements

        This Form 10-K contains forward-looking statements regarding the outlook for tanker and dry cargo markets, and the Company's prospects, including prospects for certain strategic alliances. There are a number of factors, risks and uncertainties that could cause actual results to differ from the expectations reflected in these forward-looking statements, including changes in production of or demand for oil and petroleum products, either globally or in particular regions; greater than anticipated levels of newbuilding orders or less than anticipated rates of scrapping of older vessels; changes in trading patterns for particular commodities significantly impacting overall tonnage requirements; changes in the rates of growth of the world and various regional economies; risks incident to vessel operation, including discharge of pollutants; unanticipated changes in laws and regulations; increases in costs of operation; the availability to the Company of suitable vessels for acquisition or chartering in on terms it deems favorable; changes in the pooling arrangements in which the Company participates, including withdrawal of participants or termination of such arrangements; the ability to attract and retain customers; the ability of the Company to successfully combine the operations of the Company and Stelmar; and changes affecting the vessel owning joint ventures in which the Company is a party. The Company assumes no obligation to update or revise any forward-looking statements. Forward- looking statements in this Form 10-K and written and oral forward-looking statements attributable to the Company or its representatives after the date of this Form 10-K are qualified in their entirety by the cautionary statement contained in this paragraph and in other reports hereafter filed by the Company with the Securities and Exchange Commission.

Operations

        The bulk shipping industry has many distinct market segments based, in large part, on the size and design configuration of vessels required and, in some cases, on the flag of registry. Freight rates in each market segment are determined by a variety of factors affecting the supply and demand for suitable vessels. Tankers and Dry Bulk Carriers are not bound to specific ports or schedules and therefore can respond to market opportunities by moving between trades and geographical areas. The Company has established four reportable business segments: Foreign Flag VLCCs, Aframaxes and Product Carriers, and U.S. Flag Vessels.

        The following chart reflects the percentage of TCE revenues generated by the Company's four reportable segments for each year in the three-year period ended December 31, 2004 and excludes the Company's proportionate share of TCE revenues of joint ventures. Following the acquisition of two U.S. Flag Product Carriers in the second quarter of 2004, the Company revised its reportable segments

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in 2004 to include all U.S. Flag vessels as one reportable segment. Segment information for 2003 and 2002 has been reclassified to conform to the 2004 presentation.

        The following chart reflects the percentage of income from vessel operations accounted for by each reportable segment. Income from vessel operations is before general and administrative expenses and the Company's share of income from joint ventures:

        The increase in the relative contribution of VLCCs and Aframaxes to TCE revenues and income from vessel operations in 2004 compared with both 2003 and 2002 reflects the Company's focus on these two segments. From 2002 to 2004, the revenue days of the Company's VLCCs and Aframaxes increased by 57% and 19%, compared with the respective prior year. In 2004, OSG entered into charter-in arrangements with other pool members covering seven VLCCs and three Aframaxes to take advantage of the current attractive spot market rates. Revenues from Foreign Flag vessels are derived principally from voyage charters and are, therefore, significantly affected by prevailing spot rates. During 2002, spot rates, particularly for VLCCs and Aframaxes, were significantly lower than their levels for 2004 and 2003. In contrast to the Foreign Flag fleet, revenues from U.S. Flag vessels are derived principally from long-term fixed rate charters generating a fixed level of TCE earnings. Accordingly, the relative contribution of the U.S. Flag vessels to consolidated TCE revenues and to consolidated income from vessel operations is dependent on the level of freight rates then existing in the international market, increasing when rates in the international market decrease and decreasing when such rates increase.

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        The following chart reflects the percentage of equity in income of joint ventures by each reportable segment. The joint venture that is operating four V Pluses is included in the VLCC segment because of the similarity in their trade.

        The relative contribution to equity in income of joint ventures of the Company's joint venture VLCCs and one Aframax grew in 2004 compared with 2003 because of the significant increase in spot market rates earned by such vessels relative to the Company's share of incentive hire received from Alaska Tanker Company (U.S. Flag vessels), which does not fluctuate with rates. The increase in spot rates for VLCCs more than offset a reduction in their revenue days.

        In 2004, the Company completed a transaction with its partner covering six joint venture companies, each of which owned a VLCC. This transaction provided for an exchange of joint venture interests that resulted in the Company owning 100% of the Dundee, Sakura I and Tanabe, and the joint venture partner owning 100% of the Edinburgh, Ariake and Hakata. The results of the Dundee, Sakura I and Tanabe are included in the VLCC segment from the effective date of the transaction.

        In July 2004, a joint venture formed with a Tankers pool partner took delivery of four V Pluses. The V Pluses have earned a significant premium to the average rates achieved by the Company's VLCCs.

        For additional information regarding the Company's four reportable segments for the three years ended December 31, 2004, see Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 7, and Note C to the Company's consolidated financial statements set forth in Item 8.

Fleet Summary

        As of December 31, 2004, OSG's Foreign Flag and U.S. Flag operating fleets consisted of 61 vessels, including six vessels owned by joint ventures (four V Pluses, one VLCC and one Aframax) in which the Company has an average interest of 47% and 14 vessels that are chartered in under operating leases. Seven of the chartered-in vessels are VLCCs. The Company has less than a 100% interest in six of the chartered-in VLCCs, with an average participation interest of 37%. Three of the chartered-in vessels are Aframaxes in which the Company has an average participation interest of 58%. In addition, the Company has a participation interest of 40% in the time charter-in of one VLCC, which is scheduled to commence upon its delivery from a shipyard in mid 2005. Four LNG Carriers are scheduled to be delivered in late 2007 and early 2008 to a joint venture in which the Company has a 49.9% interest.

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Tankers and Dry Bulk Vessels

LNG Carriers

        The following chart summarizes the fleet and its tonnage, weighted to reflect the Company's ownership and participation interests in vessels.

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        In October 2004, the Company agreed to sell the Diane, one of the Panamax Product Carriers referred to in the tables above. The sale was completed in January 2005.

        In November 2004, the Company agreed to sell and charter back the four Handysize Product Carriers. The sale and charter back for periods from 42 to 48 months was completed in January 2005.

        In February 2005, the Company agreed to sell the Mary Ann, its remaining Panamax Product Carrier.

        The acquisition of Stelmar in January 2005 added 40 vessels to the Company's international flag fleet, comprising 24 Handysize Product Carriers, 13 Panamaxes and three Aframaxes. Giving effect to the acquisition of Stelmar, the international flag fleet totals 90 vessels aggregating 12,860,335 dwt.

International Fleet Operations

        The Company's VLCC and Aframax fleets constitute two of its reportable business segments. In order to enhance vessel utilization and TCE revenues, the Company has placed its VLCCs and Aframaxes in pools that are responsible for the Commercial Management of these vessels.

Tankers International LLC ("Tankers")

        In December 1999, the Company and five other leading tanker companies formed Tankers to pool the commercial operation of their modern VLCC fleets. As of December 31, 2004, Tankers managed a fleet of 41 modern VLCCs of which the Company has contributed 20 vessels, including one ship owned by a joint venture in which the Company has a 30% ownership interest and seven vessels that are chartered-in. The Company has a 100% interest in one of the chartered-in VLCCs and participation interests ranging from 15% to 50% in the six other chartered-in vessels.

        Tankers performs the Commercial Management of its participants' vessels. It collects revenues from customers, pays voyage-related expenses, and distributes TCE revenues to the participants, after deducting administrative fees, according to a formula based upon the relative carrying capacity, speed, and fuel consumption of each vessel. Tankers also Commercially Manages the four V Pluses.

        One of the Tankers pool members is withdrawing its five vessels from the pool during the first four months of 2005. These withdrawals will be offset by the addition of the four V Pluses and three VLCCs during the first nine months of 2005. One of the VLCCs is the Company's Equatorial Lion, which entered the pool in February 2005 at the end of its charter out, and another is a chartered-in vessel in which the Company will hold a 40% participation interest.

        The large number of vessels managed by Tankers, and the COAs into which Tankers has entered, give it the ability to enhance vessel utilization. In recent years, crude oil shipments from West Africa to Asia have expanded, increasing opportunities for vessels otherwise returning in ballast (i.e., without cargo) from Europe and North America to load cargoes in West Africa for delivery in Asia. Such combination voyages are used to maximize vessel utilization by minimizing the distance vessels travel in ballast.

        By consolidating the Commercial Management of its substantial fleet, Tankers is able to offer its customers "one-stop shopping" for high-quality VLCCs and V Pluses. The size of the fleet enables Tankers to become the logistics partner of major customers, providing new and improved tools to help them better manage their shipping programs, inventories, and risk.

Aframax Pool ("Aframax International")

        Since 1996, the Company and PDV Marina S.A., the marine transportation subsidiary of the Venezuelan state-owned oil company, have pooled the Commercial Management of their Aframax fleets. In the past three years, five owners have joined the pool, adding 12 vessels. With 36 vessels that

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generally trade in the Atlantic Basin, North Sea and the Mediterranean, the Aframax International pool has been able to enhance vessel utilization with backhaul cargoes and COAs, thereby generating higher TCE revenues than would otherwise be attainable in the spot market.

        Upon acquisition of Stelmar, the Company acquired three additional Aframaxes, two of which are chartered in. These three Aframaxes are operating on time charters out that are scheduled to end between September 2005 and February 2006. These vessels will join Aframax International following the expiration of such time charters

Commercially Flexible Fleet of Product Carriers

        As of December 31, 2004, OSG's fleet of six Foreign Flag Product Carriers constitutes one of the Company's reportable business segments. OSG's four Handysize Product Carriers operate in the Atlantic Basin and provide the Company's customers full access to all Boston-area terminals, allowing maximum discharge flexibility. In January 2005, the Company sold and bareboat chartered back these four vessels for an average term of 46 months. In January 2005, the Company also completed the sale of one of its two Panamax Product Carriers. In February 2005, the Company agreed to sell its remaining Panamax Product Carrier.

        The vessels added to the Company's fleet upon the acquisition of Stelmar included 24 Handysize Product Carriers. The Company plans to integrate the Commercial Management of its newly acquired Handysize Product Carriers with its four Handysize Product Carriers. The Company believes that there are currently greater opportunities to enter long-term time charters for its Handysize Product Carriers than for its VLCCs and Aframaxes and, thereby, increase the amount of earnings that is predictable and not subject to spot-market rate fluctuations.

Entrance into LNG Carrier Market

        In November 2004, after a competitive tender process, Qatar Liquefied Gas Company (II) selected a joint venture in which the Company has a 49.9% interest to time charter to it four LNG Carrier newbuildings for twenty-five years, with options to extend. The joint venture, which is between the Company and Qatar Gas Transport Company Limited (Nakilat), ordered four 216,000 cbm LNG Carriers at a total purchase price of $908 million for delivery in 2007 and 2008, at which times the time charters will begin. These state-of-the art vessels will be technically managed by the Company. Through the award of these time charters, the Company is strategically diversifying its business, entering a market that the Company believes offers significant opportunities.

U.S. Flag Fleet Operations

        The Company's U.S. Flag vessels constitute one of the Company's reportable business segments.

        Under the Jones Act, shipping between United States ports, including the movement of Alaskan crude oil, is reserved for U.S. Flag vessels that are built in the U.S. and owned by U.S. companies, more than 75% owned and controlled by U.S. citizens. The three U.S. Flag Crude Tankers and four U.S. Flag Product Carriers operate in trades protected by the Jones Act.

        The Merchant Marine Act of 1936, as amended, requires that preference be given to U.S. Flag vessels, if available at reasonable rates, in the shipment of at least half of all U.S. government-generated cargoes and 75% all of food-aid cargoes. The Company's two U.S. Flag Dry Bulk Carriers generate most of their revenue from these preference trades.

        Since late 1996, the Company's U.S. Flag Pure Car Carrier has participated in the U.S. Maritime Security Program (the "Program"), which ensures that militarily-useful U.S. Flag vessels are available to the U.S. Department of Defense in the event of war or national emergency. Under the Program, the Company receives approximately $2.1 million per year through 2005. In February 2005, the Company

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signed four agreements with the Maritime Administrator of the Department of Transportation pursuant to which, in October 2005, the Company will enter three U.S. Flag Product Carriers and one U.S. Flag Pure Car Carrier into the Program for ten-year terms. The Company intends to acquire three Foreign Flag Product Carriers that satisfy the requirements of the Program and reflag them to U.S. Flag. The Company's U.S. Flag Pure Car Carrier will continue in the Program through 2007, at which time the Company intends to substitute a modern U.S. Flag Car Carrier into the Program. Under the Program, the Company will receive approximately $2.6 million per year for each vessel through 2008, $2.9 million per year for each vessel from 2009 through 2011, and $3.1 million per year for each vessel from 2012 through 2016, subject in each case to annual Congressional appropriations.

        To encourage private investment in U.S. Flag vessels, the Merchant Marine Act of 1970 permits deferral of taxes on earnings from U.S. Flag vessels deposited into a Capital Construction Fund and amounts earned thereon, which can be used for the construction or acquisition of, or retirement of debt on, qualified U.S. Flag vessels (primarily those limited to foreign, Great Lakes, and noncontiguous- domestic trades). The Company is a party to an agreement under the act. Under the agreement, the general objective is (by use of assets accumulated in the fund) for U.S. Flag vessels to be constructed or acquired. If the agreement is terminated or amounts are withdrawn from the Capital Construction Fund for non-qualified purposes, such amounts will then be subject to federal income taxes. Monies can remain tax-deferred in the fund for a maximum period of 25 years (commencing January 1, 1987 for deposits prior thereto). The Company had approximately $268 million in its Capital Construction Fund as of December 31, 2004. The Company's balance sheet at December 31, 2004 includes a liability of approximately $84 million for deferred taxes on the fund deposits and earnings thereon.

Alaska Tanker Company, LLC ("ATC")

        Building on a more than 30-year relationship between the Company and BP p.l.c. ("BP"), ATC was formed in early 1999 by the Company, BP, and Keystone Shipping Company ("Keystone"), to create the leading provider of marine transportation services in the environmentally sensitive Alaskan crude-oil trade. ATC, which is owned 37.5% by the Company, 37.5% by Keystone, and 25% by BP, manages the vessels carrying BP's Alaskan crude oil, including three of the Company's vessels. The Company's U.S. Flag Crude Tankers are bareboat chartered to ATC, with BP guaranties. Each bareboat charter expires shortly before the date that OPA 90 precludes such single hull tanker from calling on U.S. ports. The three charters expire from June 2005 through March 2006. The bareboat charters will generate TCE revenues of approximately $15.1 million in 2005 and $1.1 million in 2006. The Company's participation in ATC provides the Company with the ability to earn additional income (incentive hire) based upon ATC's meeting certain predetermined performance standards. Such income, which is included in equity in income of joint ventures, amounted to $7.1 million in 2004, $7.6 million in 2003 and $7.8 million in 2002.

        In August 1999, the Company sold the foregoing three vessels (and two others that were subsequently disposed of by the owner in 2000 and 2004) and leased them back as part of an off-balance sheet financing that generated approximately $170 million. On July 1, 2003, the Company consolidated this entity in accordance with Financial Accounting Standards Board Interpretation No. 46. For additional information, see Note B to the consolidated financial statements set forth in Item 8. As of December 31, 2004, the balance of bank debt on the books of the entity to which such vessels were sold aggregated $15.5 million. Approximately $10.4 million of such debt is repayable in full from bareboat charter revenues received from ATC, which are guaranteed by BP.

Competition

        The bulk shipping industry is highly competitive and fragmented, with no one shipping group owning or controlling more than 6% of the world tanker fleet. OSG competes with other owners of

11

U.S. and Foreign Flag tankers and dry cargo ships operating on an unscheduled basis similar to the Company.

        OSG's vessels compete with all other vessels of a size and type required by a customer that can be available at the date specified. In the spot market, competition is based primarily on price, although charterers have become more selective with respect to the quality of vessels they hire, with particular emphasis on such factors as age, double hulls, and the reliability and quality of operations. Increasingly, major customers are demonstrating a preference for modern vessels based on concerns about the environmental risks associated with older vessels. Consequently, owners of large modern fleets have gained a competitive advantage over owners of older fleets. In the time charter market, factors such as the age and quality of a vessel and the reputation of the owner and operator tend to be more significant in competing for business.

        In both the VLCC and Aframax market segments, the Company competes against a large number of companies that own or operate vessels in these segments. Competitors include other independent shipowners, oil companies and state owned entities with fleets ranging from one to more than 40 vessels in a particular segment. While some companies operate worldwide, others focus on one or more geographical areas such as the Pacific, the Mediterranean or the Caribbean.

        As of December 31, 2004, OSG's fleet of VLCCs and V Pluses consisted of 25 vessels (8.1 million dwt) of which 24 (7.8 million dwt) are commercially managed through Tankers. As of December 31, 2004, Tankers had a fleet of 41 VLCCs (12.4 million dwt). Tankers' fleet as of December 31, 2004, represents 9.4% of the total world VLCC fleet based on deadweight tons.

        In the VLCC market segment, Tankers competes with more than 90 owners, the largest being Frontline Ltd. (34 vessels, 10.0 million dwt), Nippon Yusen Kabushiki Kaisha (33 vessels, 9.2 million dwt), VELA International Marine Ltd., the shipping arm of the Saudi Arabian oil company (31 vessels, 9.4 million dwt), Mitsui OSK Lines Ltd. (30 vessels, 8.5 million dwt) and World-Wide Shipping Agency (S) Pte. Ltd. (22 vessels, 6.4 million dwt).

        As of December 31, 2004, Aframax International consisted of 36 Aframaxes (3.8 million dwt), that generally trade in the Atlantic Basin, North Sea and Mediterranean. More than 160 owners operate in the Aframax market segment. The Company's main competitors include Teekay Shipping Corporation (54 vessels, 5.4 million dwt), Malaysian International Shipping Corporation Berhad (36 vessels, 3.7 million dwt), General Maritime Corp. (26 vessels, 2.5 million dwt), Minerva Marine Inc. (15 vessels, 1.6 million dwt), Tsakos Energy Navigation (11 vessels, 1.1 million dwt), and Novorossiysk Shipping Company (11 vessels, 1.2 million dwt).

        In the U.S. Flag trades, the Company competes with other owners of U.S. Flag vessels. Demand for U.S. Flag Product Carriers is closely linked to changes in regional energy demands and in refinery activity. These vessels also compete with pipelines and ocean-going barges, and are affected by the level of imports on Foreign Flag Product Carriers.

Environmental and Security Matters Relating to Bulk Shipping

        Domestic Requirements.    Since 1990, the tanker industry has experienced a more rigorous regulatory environment. Safety and pollution concerns have led to a greater emphasis on vessel quality and to the strengthening of the inspection programs of Classification Societies, governmental authorities and charterers.

        OPA 90 affects all vessel owners shipping oil to, from, or within the United States. Under OPA90, a vessel owner or operator is liable without fault for removal costs and damages, including economic loss without physical damage to property, of up to $1,200 per gross ton of the vessel. When a spill is proximately caused by gross negligence, wilful misconduct or a violation of a federal safety, construction or operating regulation, liability is unlimited. OPA 90 did not pre-empt state law and, therefore, states

12

remain free to enact legislation imposing additional liability. Virtually all coastal states have enacted pollution prevention, liability and response laws, many with some form of unlimited liability.

        OPA 90 phases out the use of tankers having single hulls. OPA 90 requires that tankers over 5,000 gross tons calling at U.S. ports have double hulls if contracted after June 30, 1990, or delivered after January 1, 1994. Furthermore, OPA 90 calls for the elimination of all single hull vessels by the year 2010 on a phase-out schedule that is based on size and age, unless the tankers are retrofitted with double hulls. The law permits then existing single hull tankers to operate until the year 2015 if they discharge at deep water ports, or lighter (i.e., offload cargo) more than 60 miles offshore.

        OSG's one single hull VLCC (in which OSG has a 30% interest) and its single hull Suezmax will not be permitted to trade to U.S. ports after 2009. The Company's 50% owned single hull Aframax is, based on the Company's intention to have the vessel classed as double sided in 2005, required to stop trading to U.S. ports in 2015. The four U.S. Flag Product Carriers, two of which are operated under capital leases expiring in 2011, are not affected by the OPA 90 phase-out schedule. The OPA 90 phase-out dates for the Company's remaining Foreign Flag Product Carriers are subsequent to their respective IMO phase-out dates (see the discussion of International Requirements below). Two of OSG's three U.S. Flag Crude Tankers are required to be phased out in 2005, and one in 2006, at which time each of these tankers will be at the end of its commercial life as an oil tanker.

        OPA 90 also requires owners and operators of vessels calling at U.S. ports to develop contingency plans for reporting and responding to various oil spill scenarios up to a worst case oil spill under adverse weather conditions. The plans must include contractual commitments with clean-up response contractors in order to ensure an immediate response to an oil spill. Furthermore, training programs and drills for vessel, shore and response personnel are required. The Company has developed and filed its vessel response plans with the U.S. Coast Guard and has received approval of such plans. Under U.S. Coast Guard financial responsibility regulations issued pursuant to OPA 90, all vessels entering U.S. waters are required to obtain Certificates of Financial Responsibility ("COFRs") from the U.S. Coast Guard demonstrating financial capability to meet potential oil spill liabilities. All the vessels in the Company's U.S. and Foreign Flag fleets have requisite COFRs.

        International Requirements.    The Company's vessels undergo regular and rigorous in-house safety reviews. They are also routinely inspected by port authorities, Classification Societies, and major oil companies. All of the Company's vessels are certified under the standards reflected in International Standards Organization's 9002 quality assurance program and IMO's International Safety Management safety and pollution prevention protocols. In 2002, our New York office obtained 14001 Certification for Environmental Management Systems. Under the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention promulgated by the IMO, vessel operators are required to develop an extensive safety management system for each of the vessels over which they have operational control. The system includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The International Safety Management Code requires a certificate of compliance to be obtained both for the vessel manager and for each vessel that it operates. We have obtained such certificates for our shoreside offices and for all of the vessels that we manage.

        MARPOL 73/78 regulations of the IMO require double hulls or equivalent tanker designs for newbuildings ordered after 1993. In addition, the regulations, which were amended in 2001, provided a timetable for the phase out of single hull tankers. This timetable was amended again in December 2003 in response to European Union ("EU") proposals, further accelerating the final phase-out dates for single hull tankers. The new phase-out regime will become effective on April 5, 2005. For Category 1 tankers (pre-MARPOL tankers without segregated ballast tanks, generally built before 1982), the final phase-out date has been brought forward to 2005 from 2007. For Category 2 tankers (MARPOL

13

tankers, generally built after 1982) the final phase out date was brought forward to 2010 from 2015. In addition, a Condition Assessment Scheme ("CAS") will apply to all single hull tankers 15 years or older. Flag states, however, may permit the continued operation of Category 2 tankers beyond 2010, subject to satisfactory CAS results, but only to 2015 or 25 years of age, whichever comes earlier. Category 2 tankers fitted with double bottoms or double sides not used for the carriage of oil will be permitted to trade beyond 2010 to 25 years of age, subject to the approval of the flag state. The latest amendments to MARPOL 73/78 will ban the oldest single hull tankers from worldwide trading by the end of 2005, while most of the remaining single hull tankers will be excluded from the international oil tanker trades by 2010.

        Although flag states may grant life extensions to Category 2 tankers, port states are permitted to deny entry to their ports and offshore terminals to single hull tankers operating under such life extensions after 2010, and to double sided or double bottomed tankers after 2015.

        A new MARPOL Regulation 13H was also introduced, banning the carriage of heavy grade oils in single hull tankers of more than 5,000 dwt after April 5, 2005. This regulation will predominantly affect heavy crude oil from Latin America as well as heavy fuel oil, bitumen, tar and related products. Flag states, however, may permit Category 2 tankers to continue to carry heavy grade oil beyond 2005, subject to satisfactory CAS results.

        EU regulation (EC) No. 417/2002, which was introduced in the wake of the sinking of the Erika off the coast of France in December 1999, provided a timetable for the phase out of the single hull tankers from EU waters. The subsequent sinking of the Prestige off the coast of Spain in November 2002 prompted the EU to implement an immediate ban on the transport of heavy crude oil and heavy fuel oil in single hull tankers loading or discharging at EU ports. In addition, the previous timetable was amended with the introduction of regulation (EC) No. 1726/2003 to further accelerate the phase out of single hull tankers. The new regulation came into force during October 2003 and banned all Category 1 single hull tankers over the age of 23 years immediately, with all Category 1 single hull tankers being phased out by 2005. For Category 2 single hull tankers, the final phase-out date was set at 2010, with double sided or double bottomed tankers permitted to trade until 2015 or until reaching 25 years of age, whichever comes earlier.

        Because OSG's Foreign Flag tanker fleet comprises mainly modern double hull vessels, the impact of the revised EU regulations and the revised and accelerated IMO phase out schedule will be limited. The following table summarizes the impact of such regulations on the Company's single hull and double sided Foreign Flag tankers:

(1)

Assumes that flag state permits continued trading.

14

(2)

30% owned.

(3)

100% owned.

(4)

50% owned. Because the cost and impact on cargo carrying capacity necessary to have vessel classed as double sided are minimal and because the Company intends to make such changes, the evaluation of the remaining useful life was made on the basis that the vessel was double sided.

(5)

SH = single hull/segregated ballast tanks; DS = double sided.

(6)

In November 2004, the Company agreed to sell and charter back these vessels for terms ranging from 42 to 48 months. The sales and charter backs were completed in January 2005.

        All six of the double-sided Handysize Product Carriers in the Stelmar fleet are chartered in on leases that expire prior to the date they are affected by the revised EU regulations.

        The Company's three U.S. Flag Crude Tankers and four U.S. Flag Product Carriers participate in the U.S. Jones Act trades and are therefore not affected by the IMO phase-out schedule. The U.S. has not adopted the 2001 amendments to the MARPOL regulations, which were viewed as less restrictive than OPA 90 regulations that were already in place.

        Many users of oil transportation services operating around Europe are showing a willingness to pay a higher freight rate for double hull tankers than for single hull tankers. It is becoming increasingly more difficult to obtain clearance for single hull tankers from many countries and oil terminals.

        Insurance.    Consistent with the currently prevailing practice in the industry, the Company presently carries protection and indemnity ("P&I") insurance coverage for pollution of $1.0 billion per occurrence on every vessel in its fleet. P&I insurance is provided by mutual protection and indemnity associations ("P&I Associations"). The P&I Associations that comprise the International Group insure approximately 90% of the world's commercial tonnage and have entered into a pooling agreement to reinsure each association's liabilities. Each P&I Association has capped its exposure to each of its members at approximately $4.25 billion. As a member of a P&I Association, which is a member of the International Group, the Company is subject to calls payable to the associations based on its claim record as well as the claim records of all other members of the individual Association of which it is a member, and the members of the pool of P&I Associations comprising the International Group. While the Company has historically been able to obtain pollution coverage at commercially reasonable rates, no assurances can be given that such insurance will continue to be available in the future.

        The Company carries marine hull and machinery and war risk insurance, which includes the risk of actual or constructive total loss, for all of our vessels. The vessels are each covered up to at least their fair market value, with deductibles ranging from $100,000 to $185,000 per vessel per incident. The Company is self insured for hull and machinery claims in amounts in excess of the individual vessel deductibles up to a maximum aggregate loss of $2,000,000 per policy year.

        The Company currently maintains loss of hire insurance to cover loss of charter income resulting from accidents or breakdowns of our vessels that are covered under the vessels' marine hull and machinery insurance. Although loss of hire insurance covers up to 120 days lost charter income per vessel per incident, the Company bears the first 27 days lost for each covered incident.

        Security Matters.    As of July 1, 2004, all ships involved in international commerce and the port facilities that interface with those ships must comply with the new International Code for the Security of Ships and of Port Facilities ("ISPS Code"). This includes passenger ships, cargo ships over 500 gross tons, and mobile offshore drilling rigs. The ISPS Code, which was adopted by the IMO in December 2002, provides a set of measures and procedures to prevent acts of terrorism, which threaten the security of passengers and crew and the safety of ships and port facilities. All of OSG's Ship

15

Security Plans for its vessels have been approved by the appropriate regulatory authorities and have been implemented.

Taxation of the Company

        The following summary of the principal United States tax laws applicable to the Company, as well as the conclusions regarding certain issues of tax law, are based on the provisions of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed U.S. Treasury Department regulations, administrative rulings, pronouncements and judicial decisions, all as of the date of this Annual Report. No assurance can be given that changes in or interpretation of existing laws will not occur or will not be retroactive or that anticipated future circumstances will in fact occur. The Company's views should not be considered official, and no assurance can be given that the conclusions discussed below would be sustained if challenged by taxing authorities.

        For 2005, substantially all foreign corporations, including those acquired as a result of the 2005 acquisition of Stelmar, owning or operating vessels will be subsidiaries of OSG International, Inc., a wholly owned subsidiary of the Company incorporated in the Marshall Islands ("OIN"). These corporations have made or will make special U.S. tax elections under which they will be treated as "branches" of OIN rather than separate corporations for U.S. federal income tax purposes. For 2004, OIN and its subsidiaries contributed substantially all of the Company's pre-tax income.

        As a result of changes made by the American Jobs Creation Act of 2004 ("2004 Act"), as discussed below, for taxable years beginning after December 31, 2004, the Company will no longer be required to report in income on a current basis the undistributed foreign shipping income earned by OIN under the "Subpart F" provisions of the Code.

Taxation to OIN of its Shipping Income: In General

        The Company anticipates that OIN will derive substantially all of its gross income from the use and operation of vessels in international commerce and that this income will principally consist of hire from time and voyage charters for the transportation of cargoes and the performance of services directly related thereto, which is referred to herein as "shipping income."

        Shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the U.S. will be considered to be 50% derived from sources within the United States. Shipping income attributable to transportation that both begins and ends in the United States will be considered to be 100% derived from sources within the United States. OIN does not engage in transportation that gives rise to 100% U.S. source income. Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States. Shipping income derived from sources outside the U.S. will not be subject to any U.S. federal income tax. OIN's vessels will operate in various parts of the world, including to or from U.S. ports. Unless exempt from U.S. taxation under Section 883 of the Code, OIN will be subject to U.S. federal income taxation of 4% of its U.S. source shipping income on a gross basis without the benefit of deductions.

Application of Code Section 883

        Under Section 883 of the Code, OIN will be exempt from the foregoing U.S. taxation of its U.S source shipping income if it is a "controlled foreign corporation" within the meaning of Section 957 of the Code and, under Treasury regulations that were promulgated prior to the enactment of the 2004 Act, more than 50% of OIN's shipping income is includible in the gross income of U.S. persons that own 10% or more of OIN's stock. While OIN is a controlled foreign corporation, as a result of the passage of the 2004 Act the Company will no longer be required to include OIN's undistributed shipping income in its income under Subpart F of the Code. In these circumstances, it is presently

16

unclear whether the IRS will interpret the Treasury regulations as currently written in a manner that may deprive OIN of the benefits of Section 883 of the Code. To the extent OIN is unable to qualify for exemption from tax under Section 883, OIN's U.S. source shipping income will become subject to the 4% gross basis tax regime described below.

Taxation of OIN in Absence of Code Section 883 Exemption

        4% Gross Basis Tax Regime.    To the extent the benefits of Section 883 are unavailable with respect to any item of U.S. source income, OIN's U.S. source shipping income, to the extent not considered to be "effectively connected" with the conduct of a U.S. trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions. Since under the sourcing rules described above no more than 50% of OIN's shipping income would be treated as being derived from U.S. sources, the maximum effective rate of U.S. federal income tax on OIN's shipping income would never exceed 2% under the 4% gross basis tax regime.

        Net Basis and Branch Profits Tax Regime.    To the extent the benefits of the Section 883 exemption are unavailable and OIN's U.S. source shipping income is considered to be "effectively connected" with the conduct of a U.S. trade or business, any such "effectively connected" U.S. source shipping income, net of applicable deductions, would be subject to U.S. corporate income tax currently imposed at rates up to 35%. The Company believes, however, that none of OIN's U.S. source shipping income will be "effectively connected" with the conduct of a U.S. trade or business. In addition, OIN may be subject to the 30% "branch profits" taxes on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of its U.S. trade of business.

        Gain on Sale of Vessels.    From time to time, OIN may cause a vessel to be sold. As a result of OIN vessels calling at U.S. ports and certain services related thereto performed in the U.S., OIN may be viewed as engaged in the conduct of a U.S. trade or business. Therefore, to the extent gain from the sale of a vessel is treated as U.S. source income and exemption from tax proves to be unavailable under Section 883, such gain may be subject to U.S. corporate income tax as "effectively connected" income (determined under rules different from those discussed above) under the net basis and branch tax regime discussed above. To the extent circumstances permit, OIN intends to structure the sale of vessels in a manner so that the gain will not be subject to U.S. corporate income taxation.

Taxation to OSG of OIN's Shipping Income

        For taxable years beginning on or after January 1, 1987 and ending on or before December 31, 2004, the Company, as a 10% shareholder of controlled foreign corporations, was subject to current taxation on the shipping income of its foreign subsidiaries. To make U.S.-controlled shipping companies competitive with foreign-controlled shipping companies, through the passage of the 2004 Act, Congress repealed the current income inclusion by 10% shareholders of the shipping income of controlled foreign corporations. Accordingly, for years beginning on or after January 1, 2005, the Company will not be required to include in income OIN's undistributed shipping income.

        For taxable years beginning on or after January 1, 1976 and ending on or before December 31, 1986, the Company was not required to include in income the undistributed shipping income of its foreign subsidiaries that was reinvested in qualified shipping assets. For taxable years beginning on or after January 1, 1987, the Company is required to include in income the deferred shipping income from this period to the extent that at the end of any year the investment in qualified shipping assets is less than the corresponding amount at December 31, 1986. By virtue of the nature of OIN's business, the Company anticipates that the recognition of this deferred income will be postponed indefinitely. This is discussed in more detail in Note I to the Company's consolidated financial statements set forth in Item 8.

17

Fleet Listing as of December 31, 2004

18

(1)

Commercially managed, or will upon delivery or expiration of time charter, be managed, by Tankers International.

19

(2)

Time Charter-in:

(3)

Commercially managed by Aframax International.

(4)

The Diane was sold and delivered in January 2005. The Company agreed to sell the Mary Ann in February 2005.

(5)

The Vega, Delphina, Neptune and Uranus were sold and delivered in January 2005 and chartered back on a bareboat basis for terms of from 42 to 48 months.

(6)

Vessels subject to securitization financing.

(7)

22-year capital leases expiring 2011.

(8)

Bareboat Charter-in:

(9)

DH = double hull; SH/SBT = single hull/segregated ballast tanks; DS = double sided; DB = double bottom.

20

Additional Vessels Acquired upon Acquisition of Stelmar, as of February 20, 2005

21

(1)

Bareboat Charter-in:

(2)

Commercially managed by Stelcape.

Glossary

Vessel Types Owned by OSG

22

23

24

25

Available Information

        The Company makes available free of charge through its internet website, www.osg.com, its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission.

        The Company also makes available on its website, its corporate governance guidelines, its code of business conduct, and charters of the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee of the Board of Directors.

ITEM 2.    PROPERTIES

        See Item 1.

ITEM 3.    LEGAL PROCEEDINGS

        On September 11, 2003, the Department of Transport of the Government of Canada commenced an action against the Company's Foreign Flag Product Carrier, the Uranus, charging the vessel with violations of regulations under the Canada Shipping Act with respect to alleged discrepancies in the vessel's oil record book during the period between December 2002 and March 2003. On January 22, 2004, the Department of Transport withdrew all pending charges related to the alleged discrepancies.

        On October 1, 2003, the U.S. Department of Justice served a grand jury subpoena directed at the Uranus and the Company's handling of waste oils. The U.S. Department of Justice has subsequently served related subpoenas requesting documents concerning the Uranus and other vessels in the Company's fleet. Several witnesses have appeared before the grand jury. The Company has been cooperating with the investigation and in the fall of 2004 commenced negotiations with the U.S. Department of Justice to resolve the investigation. Such a resolution may involve an acknowledgment by the Company of its responsibility for alleged past record keeping violations of environmental regulations governing the handling of waste oils by some sea staff aboard the Uranus. In the fourth quarter of 2004, the Company made a provision (in the amount of $6.0 million) for anticipated fines, environmental compliance costs, contributions to environmental protection programs and other costs associated with a possible settlement of the investigation. Negotiations with the U.S. Department of Justice are continuing and while management of the Company believes that the total fines and the above referenced costs associated with a settlement of the investigation may range from $6.0 million to $10.0 million, there can be no assurance that a satisfactory settlement can be achieved or that the provision or the estimated range will be sufficient to cover such fines and costs.

        During recent years, the Company has recognized heightened concerns in many jurisdictions over the improper disposal of waste oil from oceangoing vessels and has implemented a number of measures to assure that the Company's vessels comply with all applicable laws in this regard. Beginning in 2002, the Company developed and installed aboard all its vessels an "environmental tag" system that prevents the decoupling of waste lines to bypass pollution control equipment and improperly discharge waste oil

26

at sea. The Company has also developed and begun installing equipment that will automatically monitor and record all data for engine room bilge water and waste oil control and that will prevent tampering with meters that limit waste oil content of discharges. The Company believes that it is the only major tanker corporation to install both an "environmental tag" system and monitors for its fleet. The Company has also substantially enhanced its training and procedures so as to ensure compliance with environmental regulations. It is the Company's policy to comply with all environmental regulations and it believes the actions it has taken are among the best practices in the industry to ensure the proper operation of its vessels.

        The Company is a party, as plaintiff or defendant, to various suits in the ordinary course of business for monetary relief arising principally from personal injuries, collision or other casualty and to claims arising under charter parties. All such personal injury, collision and casualty claims against the Company are fully covered by insurance (subject to deductibles not material in amount). Each of the claims involves an amount which, in the opinion of management, is not material in relation to the consolidated current assets of the Company as shown in the Company's Consolidated Balance Sheet as at December 31, 2004, set forth in Item 8.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.

Executive Officers of the Registrant

        The term of office of each executive officer continues until the first meeting of the Board of Directors of the Company immediately following the next annual meeting of its shareholders, to be held on June 7, 2005, and until the election and qualification of his successor. There is no family relationship between the executive officers.

        During the five years prior to joining the Company in January 2004 as an officer and director, Mr. Morten Arntzen was employed by American Marine Advisors, Inc. as Chief Executive Officer.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a)

The Company's common stock is listed for trading on the New York Stock Exchange and the Pacific Exchange, Inc. under the trading symbol OSG. The range of high and low closing sales prices of the Company's common stock as reported on the New York Stock Exchange for each of the quarters during the last two years are set forth below.

(b)

On February 22, 2005, there were 594 shareholders of record of the Company's common stock.

(c)

In June 2003, OSG announced a 16.7% increase in its annual dividend to 70¢ per share from 60¢ per share of common stock. Subsequent thereto, the Company paid two regular quarterly dividends in 2003 and four in 2004 of 17.5¢ per share of common stock. Prior to the above change, the Company paid a quarterly dividend of 15¢ per share of common stock. The payment of cash dividends in the future will depend upon the Company's operating results, cash flow, working capital requirements and other factors deemed pertinent by the Company's Board of Directors.

ITEM 6.    SELECTED FINANCIAL DATA

        The following unaudited selected consolidated financial data for the years ended December 31, 2004, 2003 and 2002, and at December 31, 2004 and 2003, are derived from the audited consolidated financial statements of the Company set forth in Item 8, which have been audited by Ernst & Young LLP, independent auditors. The unaudited selected consolidated financial data for the years ended December 31, 2001 and 2000, and at December 31, 2002, 2001 and 2000, are derived from audited

28

consolidated financial statements of the Company not appearing in this Annual Report, which have also been audited by Ernst & Young LLP.