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MARKETS OSVs the pre-war demand forecast by more than 50%. More broadly, activity levels and payment capacity are

Moreover, the duration of the confict is also likely to being affected by contractors operating on lumpsum or impact the pace of the return to normality, with a short milestone-based contracts, where delays in materials and confict suggesting returning to pre-war levels already next offshore execution are contributing to lower fxture vol- year, while a prolonged confict can lead to subdued ac- umes. Other shipowners have also highlighted challenges tivity throughout 2027 due to delays in fnal investment related to GPS jamming, which is preventing certain off- decisions and the constrained supply chain environment. shore installation work from being carried out safely.

On the supply side, the current situation will likely add The near-term outlook is a pause, not a structural to the already aging feet in the region, which have reached downturn. Owners with unplanned downtime can use an average age of more than 16 years. Most shipowners the current window to accelerate vessel maintenance and have paused strategic growth plans and feet renewals lo- special surveys, being well positioned for a potential up- cally, which we see leading to another year of limited ac- turn in activity. tion to reduce the regional feet age. Compounding the While OSV dayrates reached multi-year highs through issue, some shipowners such as HEA Energy in the UAE 2024 and early 2025 due to tight supply and strong EPC and Milaha in Qatar face challenges, as their newbuilds in activity, forward indicators now point to a stabilizing rate the orderbook remain blocked from entering the region, environment once activity normalize. However, overall prolonging reliance on the older tonnage. offshore operating costs are expected to increase, as owners have experienced higher daily crewing costs and insurance,

Regional Markets Feel the Impact while fuel costs have increased. In terms of incremental

In Qatar, activity has declined materially, as QatarEn- demand outside the major markets, Kuwait is expected to ergy declared force majeure twice since late February. With see up to four additional jackups on contract in the near damages to the Ras Laffan LNG facility, we have seen a term, which is likely to be postponed, yet serve as a key pause in offshore work since mid-March. Additionally, the new frontier for activity number of jack-up rigs on contract herein is expected to

Owners Look Beyond Home Markets fall from around 20 pre-war to mid-teens in the near term and several shipowners have been advised of off-hire pe- The confict is likely to accelerate regional diversifca- riods, rates being reduced to OPEX levels or signifcant tion among major Middle Eastern OSV owners. This shift rate cuts. For example, North Field West, has reportedly is already visible, with Astro Offshore expanding into West postponed drilling from the second half of 2026 to the Africa through PSV and high-end subsea vessel acquisi- second half of 2027. tions, while PIF-backed Zamil Offshore acquired Remøy

In the UAE, the market remains more stable, although Shipping last year to support international growth.

some contractors have requested general dayrate reduc- With structural oil supply shortages in the global mar- tions of roughly 25%. Shipowners are pushing back ket, we expect higher offshore activity in regions such as however, noting that both daily OPEX and war risk in- the Mediterranean, West Africa, Australia and North Sea surance costs have increased materially, leading to unsus- in the coming years, encouraging major Middle Eastern tainable vessel margins. Longer term, market sentiment owners to pursue growth outside their home markets. This remains positive, supported by the UAE’s OPEC exit and could include both traditional OSV tonnage and adjacent the aggressive capacity push to 5 million bpd by 2027, segments such as European or APAC offshore wind, sup- combined with offshore electrifcation projects to reduce ported by the renewed focus on energy security.

emissions from existing felds. That having been said, the Middle East OSV market

In Saudi Arabia, the market also remains broadly stable, currently experience a high degree of uncertainty. Utiliza- with fewer shipowners reporting cancellations or dayrate tion is likely to remain below pre-war levels in the near adjustments. Suspended jack-up rigs are generally expect- term, and a sustained recovery will depend on a durable ed to return to contract once conditions stabilize. A tender long-term agreement. Until then, owners with balance for seven to nine additional rigs with expected start-up in sheet fexibility and regional diversifcation will be best po- the second half of 2026 had an original March deadline, sitioned to navigate the uncertainty and beneft from the but this has now been postponed. eventual recovery.

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