LONDON (Bloomberg) - Frontline Ltd., the world's largest owner of supertankers, said second-quarter profit advanced 69 percent as the cost of shipping oil increased.

Net income rose to $318.4 million, or $4.25 a share, from $187.9 million, or $2.51, a year earlier, Hamilton, Bermuda-based Frontline said on Thursday in a statement. The shipping line was expected to make $339 million, or $4.53, according to the median estimate of nine analysts surveyed by Bloomberg News.

Second-quarter profit was buoyed by record production from the Organisation of Petroleum Exporting Countries (OPEC). Fleet supply was also curtailed by Iran using its fleet as floating oil storage rather than for deliveries, Frontline said.

A decline in rental rates since July is a "temporary negative development" caused by China slowing crude imports before the Olympic Games, reduced oil demand in the US and fewer West African cargoes, Frontline said. The market may strengthen as owners sail slower, world crude production increases and refineries produce more fuels, the company said.

Frontline fell 4.6 percent as of 9.12am in Oslo trading to 299 Norwegian kroner a share, valuing the shipping line at 22.3 billion kroner ($4.2 billion).

Daily rental income after fuel and port costs from company's very large crude carriers, or VLCCs, gained 68 percent to $84,300 a day. Suezmax tankers that have about half the shipping capacity saw profits advance 87 percent to $61,100 a day.

By contrast, Euronav NV, Belgium's only publicly traded oil- tanker owner, made $97,950 a day on its VLCCs and $44,800 a day from its suezmaxes in the second quarter.

Since climbing to $148,122 a day on July 1, rental returns from leasing VLCCs have plunged to $13,547 a day, according to data from the London-based Baltic Exchange, whose daily price assessments are used to settle shipping contracts and derivatives contracts.

That is below the $31,400 a day that Frontline said on Friday its VLCCs need to break even. Suezmaxes returns have slipped to $32,022 a day compared with $24,800 a day that Frontline requires for profit.

OPEC pumped a record average of 32.3 million barrels of crude a day in April, May and June. Iran deployed its fleet as floating storage, after demand for some of its crude fell.

Deducting gains of $126.7 million from the sale of assets would imply Frontline made profit of $191.6 million. That would beat the $188.25 median estimate of 10 analysts surveyed by Bloomberg.