Offshore markets have shown further softening over the past six months, with the Clarksons Offshore Index (rig, OSV and subsea dayrates) now down ~8% on last year’s peak (to 112 points, albeit still double the 2020 low) and with variation between regions (North Sea flat, Brazil more resilient) and sectors (Jack-up rates down 30% y-o-y). 2025 has also seen mixed oil company investment levels.
Energy Market
Although oil prices averaged $72/bbl in Jan-August 2025 and were $67/bbl as of early September (these levels are sufficient for the majority of offshore projects to be viable), oil markets do seem amply supplied at present. Oil demand growth this year has been relatively lacklustre (keep an eye on China), and given the roll-back of OPEC cuts during mid-2025, most forecasters see a further over-supply building into 2026, unless politics intervenes and removes some Russian/Iranian oil from the market via sanctions. Current consensus projections for over-supply imply downside risks to oil prices, with some banks particularly bearish. This may cause some IOCs in particular to further delay offshore investment commitments.
Investment Caution
Final Investment Decisions (FIDs) in offshore oil and gas projects have slowed in 2025 ($43bn in the ytd). Our full year 2025 capex commitment forecast is now $74.3bn, which would be down 17% y-o-y. There remains a good pipeline of high-capex projects which are well advanced, including South America FPSOs, and strategic gas projects which could move forward in 2026-27. However, geopolitical and economic uncertainty may need to stabilise.
Offshore oil and gas is 16% of global energy supply (offshore wind is 0.4%). In 2025, global offshore oil production is expected to grow by 3.9% to 26.2m bpd (27% of all oil), before 3.3% growth in 2026. Offshore gas output is set to grow 1.2% to 132bn cfd (32% of all gas), up 30% since 2014. Production growth in UAE and Qatar could help lift offshore gas growth to 3.4% in 2026.
Segment Review
Rig markets have had a muted year. Demand has declined by 5% y-o-y (jack-ups: -3%, floaters: -11%). Jack-up dayrates have fallen most sharply despite stable utilisation (88% today), as owners prioritised securing term cover at lower rates. In contrast, floater utilisation has fallen (78%) but dayrate declines have been more modest. Recent multi-year contract awards for 2H 26 suggest improving sentiment for longer-term rig demand. Harsh environment floater rates have held up better.
Our OSV Rate Index remains broadly stable over 2025 to date, at 189 points, down 5% on mid-2024 highs (NB: declines in some regions and sizes are higher). Sentiment is a little soft in many regional markets, though rates are still more than double the 2020 low point, and there are more positive markets, notably Brazil. Subsea markets likewise have had a softer year, but rates have only seen small-scale downward revisions and there remains sufficient confidence in the medium-term that a moderate flow of newbuilds has continued.
Interest in MOPU projects has continued with a large pipeline of projects well-advanced through FEED, notably projects off Brazil and Guyana, or projects targeting FLNG orders. However, MOPU awards in 2025 have slowed, given the decline in IOC confidence plus delays to Petrobras tender processes. 4 FPSOs, 2 FLNGs and two jack-up MOPU awards have been recorded in 2025, with 6 further prospects considered probable for 2025 (albeit with slippage risk).
Offshore newbuild activity continues at a moderate pace with 119 orders in the year-to-date adding to 271 placed in 2024. Newbuild interest has focused on niche sectors e.g. cable-lay and shuttle tankers, or on projects such as Brazilian charter-backed PSVs. However, a small amount of orders from speculative Asian capital (for OSVs/MSVs, probably for future resale) have been observed. Firm commitments to alternative fuel solutions remain focussed on renewables/North Sea tonnage. S&P activity has remained slow through 2024/25, given prices easing back from highs.
Mixed trends continue to be seen across offshore wind amid a challenging macro environment. Though 2025 has seen $29bn of project CAPEX commitments and global capacity growth of 7% (to 85 GW, ~14,800 turbines), ongoing margin pressures and varied political support continues to weigh on investor sentiment ($51bn of commitments projected in 2025). Meanwhile, European ‘wind’ vessel markets continue to see healthy dayrates, though substantial newbuild orderbooks require close attention. In the long term, offshore wind is expected to see firm growth (2035f: ~370 GW; 2050: 6% of global energy), though projections continue to be downgraded.
Overall, offshore markets are weaker than their position a year ago but remain well above the long term trend. Late 2025 and early 2026 is expected to be soft or flat, but sentiment in most sectors is more hopeful for later in 2026, particularly given the lack of fleet supply growth. However, there are macro-economic risks: in particular concerns over oil market over-supply, which could impact offshore project investment without the political factors which supported oil prices in 1H 25.
The author of this feature article is Stephen Gordon. Any views or opinions presented are solely those of the author and do not necessarily represent those of the Clarksons group.
