Middle East conflict derails jackup market recovery

In January 2026, London-based energy market research firm Westwood said that the global jackup market would begin its long‑anticipated recovery from mid-to-late 2026. That optimism was underpinned by demand from the world’s most active jackup basin, the Arabian Gulf, which alone accounts for around 36% of global jackup supply.  Early signals appeared encouraging. A growing number of developments moved closer to final investment decision, and high‑impact exploration successes, particularly offshore Kuwait, reinforced longer‑term activity visibility. Several previously suspended jackups were expected to return to work with Aramco, while many others found new work elsewhere. However, that trajectory has since been disrupted by the escalation of conflict in the Middle East beginning in February 2026. Missile strikes, drone activity, and naval incidents across the region have materially altered the operating environment.   Offshore operators have responded by prioritising personnel safety and asset protection, prompting a range of precautionary measures, such as temporary evacuations, down‑manning of rigs, delays to new drilling campaigns, more rig suspensions in Saudi Arabia, and early rig contract terminations in Qatar. Also, several rigs that were scheduled to restart operations with Aramco have yet to return to work,

Westwood stated that in late 2025 and the opening months of 2026, operators across the region issued a wide tranche of jackup tenders totalling approximately 56 rig‑years of potential demand, with anticipated start‑ups in 2026 and 2027.  “With demand temporarily subdued and limited scope for rigs to relocate out of the region, working utilisation of the marketed fleet has deteriorated sharply – from 83% in early February, prior to the outbreak of hostilities, to around 69% by late April,” Westwood explained in its analysis.

Many of the rigs affected by evacuations or down‑manning are still under contract but inactive, meaning committed utilisation remains comparatively resilient at approximately 90%. However, this figure could decrease if any other early contract terminations occur.  Westwood’s original outlook anticipated a strengthening Middle East market in 2026, with committed utilisation expected to rise from 94% in 2025 to 96%. Westwood now believes that committed utilisation will likely settle in the 89-91% range for full‑year 2026, recognising that a prolonged or escalating conflict could materially alter the balance once again.   Recently, there has been some discussion around a potential easing of tensions between Iran and the US, which, if it continues to gather momentum, could help stabilise the region and support a return to more normalised offshore activity. Any sustained move toward de-escalation would likely provide a meaningful tailwind for operator confidence.