LONDON (Bloomberg) — Bermuda-based Frontline Ltd., the world's largest operator of supertankers, said it was the first publicly traded shipping line to cancel contracts for new oil carriers and predicted a third of all orders will be delayed or cancelled.

The company said yesterday it cancelled $556 million of orders for two supertankers and four suezmaxes, out of a total of 18 contracts. Similar moves by other shipping lines may "emerge in the next few weeks", Jens Martin Jensen, chief executive officer of its management unit, said by phone.

The annulments show other owners "might be able to do something" to curtail their own orders, Anders Karlsen, an analyst at Nordea Markets in Oslo, said by phone.

Benchmark supertanker rates plunged 88 percent from their peak in July as oil producers curbed supply and ship owners expanded the global fleet. The Paris-based International Energy Agency expects the first back-to-back drop in global annual oil demand since 1983.

The benchmark rental rate for supertankers, based on Saudi Arabian shipments to Japan, averaged 47.29 Worldscale points in the first quarter, the lowest since the third quarter of 2002. Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. The rate was at 28.53 yesterday, compared with a peak of 244.53 on July 1.

Overseas Shipholding Group Inc., the largest US operator of oil tankers, predicted "orderbook destruction" on May 4 because of a lack of financing and slumping rental rates.

Global orders for new oil tankers reached a record 1,674 vessels in June 2008, according to data from Oslo-based Fearnley Consultants A/S. By capacity, the order book in the 1970s was larger because the vessels ordered were bigger. Crude oil traded in New York has dropped 57 percent since reaching a record $147.27 a barrel in July.

Frontline rose as much as 17 kroner to 164 kroner in Oslo trading, the biggest intraday gain since May 4. The company also reported yesterday that net income dropped to $76.6 million in the first quarter, or 98 cents a share, from $221 million, or $2.95, a year earlier. That beat the median estimate of $48.9 million in a Bloomberg News survey of eight analysts.

The cancellation of Frontline's orders "substantially" reduces the likelihood the company will need to sell shares, Karlsen said.