OSLO (Reuters) – Frontline, the world's biggest independent oil tanker shipping group, sees stronger markets and merger and acquisition opportunities in the coming months on the back of lower valuations hit by economic woes.

Norwegian-listed, Bermuda-registered Frontline is run by shipping tycoon John Fredriksen who is also its largest shareholder through his privately owned company Hemen Holding.

"We see this as a time of opportunity — that many companies are coming under pressure and that there will be some merger and acquisition deals to look at in the future," chief executive Jens Martin Jensen said in a Reuters interview last week.

Jensen said Frontline, which competes against companies such as US group Teekay and Denmark's AP Moeller Maersk, was eyeing companies within its segment but also groups in other segments in the tanker market.

"Maybe (it is) a bit too early, but we are moving into a phase where things are looking more interesting," he said, adding developments could take place over the next months.

In July, Frontline signalled it was interested in a merger or aquisition with rival Overseas Shipholding, in which it holds 5.6 percent.

Many of Frontline's vessels are trading in the spot market, where rates are often higher than time charter rates.

Tanker shipping rates have been volatile because of oil's ascent to record highs in July and weakening afterwards.

Oil prices have slumped amid financial turmoil and lower fuel consumption, with UScrude oil futures down more than 28 percent since a record peak of $147 a barrel.

Lower oil prices means reduced bunker prices for Frontline, which as well as boosting the bottom line could could spur extra demand from Asia and "maybe also in America", Jensen said.

Rates for a VLCC (very large crude carrier) from the Middle East Gulf to Korea were hovering around $63,000 per day last week, up from a bottom of about $8,000 in August, but down from about $225,000 at the beginning of 2008.

Jensen said he expected tanker rates to increase from current levels in the short term and was also optimistic on longer-term market prospects.

Years of high earnings in the shipping industry have resulted in a busy fleet building programme, but tonnage growth could be hampered by delays and even cancellations as some yards face crimped liquidity.