The offshore energy market in the Middle East Gulf (MEG) has progressed through distinct cycles of growth, decline, and recovery, shaped by global oil price movements, national energy policies, and the evolution of LNG markets. These cycles have had a direct impact on offshore support vessel (OSV) demand, particularly for Anchor Handling Tug Supply (AHTS) and Platform Supply Vessels (PSVs). Vessel utilization and earnings have closely followed the intensity of offshore development, with upcycles translating into strong charter markets and downturns exposing structural weaknesses.
Historically, MEG offshore activity has mirrored oil market volatility and regional production priorities. One of the first major periods of strength came between 1979 and 1981, triggered by the Iranian Revolution and a sharp rise in oil prices. This spurred urgent offshore development in Iran, Saudi Arabia, and other Gulf producers. Another strong phase emerged between 2004 and 2008, as oil prices climbed to nearly $147 per barrel, driving offshore investments such as Saudi Arabia’s Manifa project and Qatar’s LNG buildout. From 2010 to 2014, the post-financial crisis recovery supported continued activity, especially in Qatar and the UAE, with sustained oil prices and growing gas demand underpinning project pipelines. Most recently, 2021 to 2023 saw renewed momentum in response to global energy security concerns, with Saudi Aramco accelerating its offshore expansion and Qatar Energy advancing the North Field development.
These periods of offshore growth translated into improved performance for AHTS and PSV owners. Between 2006 and 2008, vessel utilization surged and day rates rose sharply as field development intensified. High-horsepower AHTS vessels and DP2 PSVs were in high demand, often under long-term contracts with national oil companies. After a brief lull during the 2009 downturn, the market regained strength from 2011 to 2014, supported by stable offshore drilling and infrastructure work. The most recent earnings rebound came in 2022–2023, as tight vessel supply and post-COVID demand recovery drove a sharp upswing in rates. Modern tonnage commanded premiums, particularly as rig activity expanded across Saudi Arabia and Qatar.
Despite these peaks, the offshore sector has faced extended downturns. The global financial crisis caused temporary disruption in 2009–2010, but a more severe downturn unfolded from 2015 through 2020, following the oil price crash and deepened by the COVID-19 pandemic. During this period, vessel oversupply became entrenched. Many units were laid up, scrapped, or shifted to other markets. Day rates fell to historic lows, prompting consolidation and financial restructuring across the sector. Fleet owners struggled to sustain operations amid weak demand and persistent pressure on margins.
A key consequence of the prolonged downturn was a steep decline in newbuild activity. Following a surge in orders around 2013 –2014, contracting nearly halted, and by early 2025 the AHTS global orderbook had dropped to just 2% of the fleet—down from 3% in 2024. This minimal pipeline is becoming a challenge for owners, especially as oil majors increasingly push for younger tonnage. A shift is underway from the traditional 20-year vessel age cap toward a 15-year limit, which could accelerate the removal of older units from the market. Meanwhile, secondhand availability is shrinking, and shipyard capacity is constrained, with many yards fully booked across vessel classes.
These dynamics are expected to support the value of modern vessels in the coming years. Owners of younger, technically compliant tonnage are likely to benefit from tightening supply and stronger chartering standards. As more operators prioritize emissions performance and operational reliability, the advantage will lean heavily toward modern fleets.
Despite the global shift toward energy transition, the MEG is set to remain central to offshore oil and gas development. National oil companies are investing not only in traditional production but also in parallel technologies like carbon capture and hydrogen. Saudi Aramco, Qatar Energy, and ADNOC continue to anchor multi -year offshore expansion programs, ensuring a baseline of consistent OSV demand. For vessel owners able to align with these strategies, the next cycle offers renewed opportunity amid a structurally tighter market.
Data Source: Intermodal