- Termination of jack-up contracts in the Middle East has injected some uncertainty into the market, however dayrates and utilisation rates appear to be holding up well. Despite geopolitical tensions in that region, oil prices have not spiked to elevated levels while global oil demand has been robust.
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- Sector rating: OVERWEIGHT.
Saudi actions injecting uncertainty into jack-up rigs but deepwater demand remains robust.
- Since Mar 24, a shift in Saudi Aramco's strategy has led to the suspension of 18 jack-up contracts across six owners in the Middle East region as it re-prioritises its key onshore and offshore oil & gas developments. As a result, industry sources forecast that jack-up rates should soften in the near to medium term.
- Note that the jack-up segment has been one of the better performers this year, with dayrates and utilisation rates up 11% and 15% y-o-y respectively.
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Markets seem nonplussed about Middle East tensions.
- Although oil prices had spiked post an exchange of rockets between Iran and Israel, the oil markets have since taken it in stride with Brent retreating back below US$90/bbl.
- In early-Mar 24, Saudi Arabia and OPEC+ agreed to keep roughly 2mmbpd offline until mid-year, a move that should balance global markets and buoy futures above US$80/bbl.
- The next OPEC ministerial meeting is scheduled for 1 June in Vienna, Austria.
Bullish US reporting season.
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