Industry

The move affects a limited portion of the company’s offshore fleet. (Image source: Adobe Stock)

Saudi Arabia-based Arabian Drilling Company has temporarily suspended a number of its offshore rigs as a precautionary measure, citing safety concerns linked to ongoing regional tensions

In a statement to the Saudi Exchange, the company confirmed that the suspensions were implemented in line with established safety and operational procedures, with a primary focus on safeguarding personnel and protecting critical assets.

The move affects a limited portion of the company’s offshore fleet, while its onshore operations remain unaffected. Arabian Drilling said its land fleet of 39 rigs continues to operate at full capacity, maintaining uninterrupted activity across its domestic projects.

Management indicated that the decision was taken following consultations with clients and an internal review of the evolving situation. The company stressed that the suspensions are expected to be temporary, with operations set to resume once conditions stabilise and risks are reassessed.

Chief executive Fahad Albani said the company remains focused on ensuring operational safety during a period of uncertainty. He noted that while offshore activity has been paused in specific cases, Arabian Drilling retains the capability to restart operations quickly when it is deemed safe to do so.

The company operates a fleet of 60 rigs, of which 45 are currently active, according to its latest disclosures. By prioritising safety-led decision-making, Arabian Drilling aims to minimise exposure to potential hazards while maintaining readiness to respond to changing conditions.
Industry observers note that precautionary suspensions are a common response during periods of heightened geopolitical risk, particularly in offshore environments where safety considerations are paramount. Such measures are typically designed to reduce the likelihood of incidents involving personnel, equipment or infrastructure.

Arabian Drilling added that it expects only a limited financial impact in the first quarter of 2026, with a recovery anticipated once operations resume. The company continues to monitor developments closely and is maintaining operational preparedness across its fleet.

The broader industry is also taking a cautious approach. ADES Holding Company recently indicated that a small number of offshore rigs across the GCC have been temporarily halted under similar circumstances, underscoring a wider emphasis on risk mitigation.

As regional uncertainty persists, safety remains a central priority for operators, with companies balancing operational continuity against the need to protect workers and infrastructure in challenging environments.

LNG trains, refineries, fuel terminals and critical gas-to-liquids facilities across the region have incurred damage. (Image source: Adobe Stock).

Repair and restoration costs of Middle East war-damaged infrastructure are likely to top US$25bn, and could rise further, according to Rystad Energy assessments

Particularly hard hit has been Qatar’s Ras Laffan Industrial City, where the destruction of LNG trains has triggered force majeure and a 17% capacity reduction, equivalent to about 12.8 million tonnes per annum (Mtpa). A full recovery could take up to five years, given that the gas turbines required to power LNG main refrigeration compressors are supplied by only three original equipment manufacturers (OEM) globally, all of which have production backlogs.

Bahrain has also been badly impacted, says Rystad. BapcoEnergies’ Sitra Refinery was struck twice, damaging two crude distillation units (CDU) and a tank farm, with force majeure declared across group operations. The facility had just been completed under its US$7bn modernisation program in December 2025. Restoring the units could require international contractors to be re-mobilised at considerable cost, as the damaged assets had only recently come online.

There were also disruptions in other countries, including the UAE, Kuwait, Iraq and Saudi Arabia. It is noteworthy that Saudi Aramco was able to swiftly restart operations at Ras Tanura, where maintenance teams were already onsite for a planned turnaround when debris fell inside the perimeter, reflecting its domestic capability.

The speed of recovery in the region will depend on execution capacity and capital deployment timing, as repair spending ramps up. Operators are likely to prioritise restoring existing fields, creating demand for EPC contractors and OEMs, especially those with regional experience and existing agreements with national oil companies. Near-term work will most likely focus on inspection, engineering and site preparation, followed by equipment replacement and construction as procurement constraints ease. In Iran, domestic and East Asian companies will likely carry out most of the repair work given continued Western sanctions, which could be slower and more expensive.

“The Gulf region’s recovery will be defined less by financial capital and more by structural constraints,” said Audun Martinsen, head of Supply Chain Research at Rystad Energy.

“While some assets may be restored within months, others could remain offline for years. Beyond the status of the Strait of Hormuz, every day of damaged or shut-in infrastructure pushes pre-war production capacity further out of reach. Iran’s South Pars offshore field and Qatar’s Ras Laffan facility stand out as particularly concerning cases. The scale of damage and long lead times for critical equipment could result in slow recovery. Urgent repairs will have to take precedence in place of planned expansion.”

Kuwait is going ahead with its offshore development programme. (Image source: Adobe Stock)

At CERAWeek, taking place in Houston from 23-27 March, Shaikh Nawaf S. Al-Sabah, deputy chairman and CEO of Kuwait Petroleum Corporation (KPC) reaffirmed progress on key strategic projects, including Project Seif and Project Peregrine, despite the current situation

Project Seif involves the development of Kuwait’s recently-discovered offshore fields, in which Kuwait is inviting IOCs to participate, and will ensure “additional production resilience and capacity to help meet production targets in the future,” Shaikh Al-Sabah said in his virtual address. Kuwait aims to lift production capacity to 4mn bpd by 2035 from around 2.5mn bpd currently.

“This is something that is of paramount importance in Kuwait, it is a project with real international scope and we’re moving ahead with this,” he confirmed.

“At the same time, on a shorter timescale, we have Project Peregrine, which is the project by which we lease and lease back our pipelines,” he continued. “This will be the largest single foreign investment in Kuwait.”

He added that the principal partners and investors had confirmed that they are still keen for the project to go ahead, and to continue to participate.

“This is a recognition that Kuwait remains open for business through these attacks,” he said, in reference to Iran’s drone attacks on the country's critical infrastructure facilities.

Shaikh Al-Sabah highlighted the global implications of any disruptions in the Strait of Hormuz, noting its “vital concern” to the world economy, with around 75% of Asia’s oil and 83% of its LNG passing through it. 

“It’s a domino effect,” he said. ”The costs of this war don’t stay in geographical lines in this region, they extend all the way through the supply chain.” He noted the impact on petrochemical supply chains and even food security, given the use of polyethylene in food packaging. He added that most of the world’s urea fertiliser comes from the Gulf.

Echoing other Gulf energy leaders, he said, “We are outraged by this attack on us. These attacks are no just on the Gulf, but are holding the world’s economy hostage. This is an attack on our sovereignty in Kuwait, on our people, and on our facilities. This act is unjustified and illegal by all standards."

Oil market conditions have become unstable. (Image source: Adobe Stock)

Oil markets are trading headlines, but the real disruption is still building, says Neil Crosby, AVP Oil Analytics at Sparta

Oil markets are becoming increasingly difficult to trade, as geopolitical headlines rather than fundamentals drive price action.

Recent price moves underline just how unstable conditions have become. Crude has swung sharply within minutes, reflecting both elevated positioning and the sheer unpredictability of political developments.

In this environment, even flat price is becoming unreliable as a signal of underlying market conditions.

At the same time, what is being presented as de-escalation may not represent a genuine shift. The lack of clear diplomatic channels and conflicting messaging suggests that recent developments are more about managing the situation than resolving it.

More importantly, there is a growing disconnect between crude and refined product markets. While crude prices have remained relatively contained, product markets, particularly diesel and jet, continue to reflect significant tightness. This divergence highlights a deeper issue: the physical supply crunch has not been resolved.

The key variable remains the Strait of Hormuz. Until there is clear and sustained evidence that flows through the strait have normalised, the market cannot be considered stable. And even in a best-case scenario, the process of restoring supply chains will take time.

Repositioning vessels, restarting refineries and rebuilding inventories are not immediate fixes. Even if flows resume, the system will take weeks, if not months, to return to anything resembling normal conditions.

That has important implications for pricing. While short-term moves may be driven by headlines or policy signals, the underlying balance remains tight. In that context, oil may still be underpriced relative to the scale and duration of disruption.

For traders, the focus is shifting away from flat price and towards physical indicators such as spreads, which better reflect real market stress.

This is no longer just a price story. It is a structural disruption, and one that is likely to persist.