Westwood: Middle East war continues to reverberate through the jackup market

In January 2026, Westwood’s RigLogix forecast that the global jackup market would begin its long‑anticipated recovery from mid‑ to late‑2026, following a difficult period stretching back to 2024. That optimism was underpinned by strengthening demand from the world’s most active jackup basin – the Arabian Gulf – which alone accounts for around 36% of global jackup supply.

As 2026 progressed, the early signals appeared encouraging. Tendering momentum accelerated across the Arabian Gulf in late 2025 and into early 2026, 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 jackups suspended during earlier market dislocations were expected to return to work with Saudi Aramco, while many others were already absorbed into new contracts elsewhere around the globe.

Taken together, the narrative was broadly constructive.

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. These have included temporary evacuations, down‑manning of rigs, delays to new drilling campaigns, and a fresh wave of rig suspensions in Saudi Arabia. More recently, the situation has intensified further with a few early contract terminations affecting assets working offshore Qatar.

Compounding this, several rigs that were scheduled to restart operations with Saudi Aramco have yet to return to work, while new campaigns – such as Masirah Oil’s offshore Oman drilling programme using Northern Offshore’s Energy Emerger – have been pushed back by a few months.

The broader implications are significant. In late 2025 and the opening months of 2026, operators across the region issued a wide tranche of jackup tenders – amounting to approximately 56 rig‑years of potential demand – with anticipated start‑ups in 2026 and 2027. The ongoing instability now risks pushing back both award timing and contract commencement. This has already been reflected in procedural delays, with Saudi Aramco extending submission deadlines for its multi‑rig tenders to 16 June, while Kuwait Oil Company has deferred its own to 1 June. Market sentiment suggests that further postponements remain possible.

Against this more cautious backdrop, there have nonetheless been pockets of renewed momentum. Al‑Khafji Joint Operations (KJO) – the 50:50 joint venture between Aramco Gulf Operations Company (AGOC) and Kuwait Gulf Oil Company (KGOC) – has issued a new Expression of Interest seeking two additional jackups for multi‑year campaigns. This comes alongside its ongoing tender for four jackups to support the Dorra field development in the Saudi‑Kuwaiti Neutral Zone.

That project, however, is not without its own geopolitical sensitivities. Iran continues to assert its claim over the Dorra field (which it refers to as Arash), describing the Saudi‑Kuwaiti development as illegal. While this injects an additional layer of geopolitical risk, Saudi Arabia and Kuwait are using the project to reinforce their sovereignty over the field. Despite a history of prolonged delays, the current position is that Dorra is not facing immediate operational obstacles and will continue to advance.

So, what does all this mean for the jackup market in the Arabian Gulf?

Middle East Jackup Supply, Demand & Committed Utilisation (2021-2027F). Source: Westwood RigLogix.

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. Crucially, many of the rigs affected by evacuations or down‑manning remain under contract but inactive, meaning committed utilisation remains comparatively resilient at approximately 90%. That said, this figure is vulnerable should further 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%. In light of continued regional instability, this forecast has now been revised. Our updated view is 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.

More recently there has been some encouraging 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. While it’s still too early to draw firm conclusions, any sustained move toward de-escalation would likely provide a meaningful tailwind for operator confidence. Against that backdrop, the underlying fundamentals of the jackup market remain intact, leaving it well positioned to pick up pace once greater clarity begins to emerge.

While the structural foundations of the jackup recovery remain intact, near‑term progress in the Middle East is being reshaped by geopolitical realities – introducing volatility, delaying momentum, and reminding the market just how finely balanced global jackup supply has become.