If you own a fleet of oil tankers, chaos in the Strait of Hormuz is actually pretty good for business. That's the message from Frontline plc (FRO), which reported blowout first-quarter results on Friday that left Wall Street estimates in the dust.

The tanker operator posted Q1 profit of $559.1 million, or $2.51 per share. Adjusted profit came in at $344.9 million, or $1.55 per share — comfortably above the $1.45 analysts were expecting. Revenue hit $714.2 million, crushing the consensus estimate of $570.8 million.

Frontline also declared a quarterly cash dividend of $1.55 per share, essentially handing its adjusted earnings straight back to shareholders.

Rates Went Through the Roof

The numbers are driven by what the industry calls time charter equivalent, or TCE, earnings — basically revenue after voyage costs. TCE revenue rose to $536.5 million from $424.5 million in the prior quarter.

Average daily spot TCE earnings were staggering: $103,500 for VLCCs (the giant supertankers), $72,400 for Suezmax tankers, and $50,700 for LR2/Aframax tankers. All were sharply higher than a year earlier.

And the good times aren't over yet. Frontline said second-quarter contracted rates remain elevated at $181,700 per day for VLCCs, $131,300 for Suezmax tankers, and $125,000 for LR2/Aframax tankers. The caveat: full-quarter rates are expected to moderate because of ballast days — the time ships spend sailing empty to their next loading port.

Fleet Makeover

Frontline's results included a $210.9 million gain from selling eight older ECO VLCCs, generating net cash proceeds of $477.2 million after debt repayment. The company also agreed to sell two older Suezmax tankers for $140 million, with expected net cash proceeds of about $106 million and an anticipated Q2 gain of about $55 million.

As of March 31, Frontline owned 72 vessels with an aggregate capacity of about 15.2 million deadweight tons. But it's not just selling — it's also buying. The company is acquiring nine scrubber-fitted ECO VLCC newbuildings for $1.224 billion, with deliveries continuing through the first quarter of 2027. Once those arrive, the fleet will expand to 79 vessels.

To fund all this, Frontline secured financing commitments and refinancing facilities totaling more than $970 million tied to fleet expansion and existing debt.

What the CEO Says

CEO Lars H. Barstad said tanker markets remained highly volatile during the first quarter as disruptions tied to the Strait of Hormuz reshaped global oil trading patterns. He noted that longer trade routes, rising ton-mile demand, and broader market inefficiencies helped keep vessel utilization and Frontline's earnings strong despite Middle East uncertainty.

“Increased ton-miles, longer trade lanes, and broader inefficiencies supported vessel utilization and kept Frontline's earnings strong throughout the quarter,” Barstad said.

He added that the company locked in part of its near-term revenue during the elevated-rate environment and expressed growing confidence in the longer-term tanker outlook, citing stronger global focus on energy security and more diversified Asian oil sourcing.

FRO Price Action: Frontline shares were down 3.47% at $37.10 at the time of publication on Friday.