Frontline plc (NYSE: FRO) reported an adjusted profit of $344.9 million for the first quarter of 2026, the company’s strongest quarterly adjusted result since the fourth quarter of 2004, as disruptions to Middle East oil flows boosted tanker markets. The Cyprus-based tanker company released unaudited results on May 22, 2026.
Total revenues for the quarter reached $714.2 million, up from $624.5 million in the prior quarter. Reported profit, which included a $210.9 million gain from the sale of eight older vessels, came in at $559.1 million, or $2.51 per share. Adjusted earnings per share were $1.55.
#Hormuz Disruptions Drive Tanker Earnings to Multi-Decade High
The Strait of Hormuz, through which a substantial share of global seaborne crude oil ordinarily transits, was effectively closed during the quarter following conflict in the Middle East. According to the company, Arabian Gulf production fell by 10 million barrels per day from February to March 2026, resulting in an average global oil supply of 103.91 million barrels per day for the quarter.
Average daily spot time charter equivalent earnings for VLCCs reached $103,500 in Q1 2026, compared with $74,200 in the prior quarter and $37,200 in the first quarter of 2025. Suezmax tankers averaged $72,400 per day and LR2/Aframax tankers averaged $50,700 per day.
For Q2 2026, the company stated that spot TCEs currently contracted are $181,700 per day for VLCCs (82% of the quarter covered), $131,300 for Suezmax (79% covered) and $125,000 for LR2 tankers (68% covered). The company said it expects full-quarter realized rates to be lower than these contracted figures due to ballast days.
"The effective closure of the Strait of Hormuz led to rapid shifts in trading patterns and owners' behavior," Lars H. Barstad, Chief Executive Officer of Frontline Management AS, said in the earnings release. "Despite the opaque situation in the Middle East, the fundamentally firm market has carried into the second quarter."
#Fleet Renewal Accelerates With Nine VLCC Newbuildings
Frontline completed the sale of eight first-generation ECO VLCCs, built between 2015 and 2016, during the quarter for a total sales price of $831.5 million. After commissions and debt repayment, the transactions generated net cash proceeds of $477.2 million and a reported gain of $210.9 million.
The company had previously agreed to acquire nine latest-generation, scrubber-fitted ECO VLCC newbuildings from affiliates of Hemen Holding Limited, Frontline's largest shareholder, for an aggregate purchase price of $1,224.0 million. Two vessels were delivered on April 30 and May 20, 2026. The remaining seven deliveries are scheduled through the first quarter of 2027, subject to closing conditions.
In April 2026, the company also agreed to sell its two oldest Suezmax tankers, built in 2014 and 2015, for $140.0 million. Frontline said it expects the transactions to generate net cash proceeds of approximately $106.0 million and a gain of approximately $55.0 million in Q2 2026.
Upon completion of the fleet transactions, Frontline's fleet will comprise 79 vessels, including 42 VLCCs, with an aggregate capacity of approximately 17.6 million DWT.
#$737 Million in New Financing Secured for Newbuilding Program
To finance the newbuilding acquisitions, the company entered into or secured commitments for credit facilities totaling up to $737.0 million in April and May 2026. A $326.4 million revolving reducing credit facility was arranged with Crédit Agricole, Standard Chartered and ING, carrying a margin of 130 basis points over SOFR. A $410.6 million term loan commitment was secured from Bank of China Hong Kong, insured by China Export and Credit Insurance Corporation, carrying a margin of 75 basis points over SOFR for the first seven years.
The company also entered into a $165.0 million revolving facility with DNB and secured a $72.5 million revolving commitment from a relationship bank to refinance existing debt on three VLCCs, providing additional revolving credit capacity of up to $88.8 million in aggregate.
As of March 31, 2026, Frontline reported liquidity of $945 million, including cash, undrawn revolvers, marketable securities, and minimum cash requirements. Long-term debt stood at $2.35 billion, with no material maturities until 2030.
The board declared a cash dividend of $1.55 per share for Q1 2026, payable on or about June 23, 2026, to shareholders of record on June 12, 2026.
Frontline operates in direct competition with other large tanker owners in VLCC, Suezmax and LR2 markets. The tanker sector is subject to significant cyclicality driven by oil supply and demand, geopolitical events and fleet supply dynamics. As of May 2026, the overall order book for VLCCs, Suezmax tankers and LR2 tankers represented approximately 29.2% of the existing global fleet.
Management said it expects the current period of supply disruption to lead to inventory rebuilding and incremental demand for seaborne crude transportation, while cautioning that actual results depend on geopolitical developments, charter rate volatility, newbuilding delivery timing and the resolution of ongoing litigation, including a claim brought by FourWorld Capital Management LLC before the Antwerp Enterprise Court. The company said it considers the FourWorld claims to be without merit. Forward-looking statements are subject to material risks and uncertainties, as described in Frontline's filings with the U.S. Securities and Exchange Commission.