Markets: Middle East OSV Market at a Crossroads After Gulf Conflict Maritime Activity Reports, Inc. Theodor Sørlie June 25, 2026 © JT Jeeraphun / Adobe Stock After several years of strong activity, the Middle East offshore market has become more volatile, with geopolitical tensions disrupting day-to-day operations. Following US and Israeli military action and subsequent Iranian attacks on neighbouring Gulf states, operators introduced precautionary measures, including temporary rig suspensions and down-manning in Saudi Arabia, the UAE and Qatar. This triggered a sharp short-term slowdown from late February into March. The April ceasefire allowed offshore activity to recover gradually, but fixing volumes remain at low volumes compared the historical average. Fewer active rigs and project delays have softened OSV demand, prompting some operators to seek standby terms or rate reductions. With Hormuz transit constrained, owners have had limited redeployment options, leaving them exposed to lower dayrates and higher near-term availability. Pre-war, leading macro advisors such as Rystad Energy expected OSV demand in the region to showcase low single-digit growth in 2026. Most industry participants viewed the healthy EPC market as a key absorber of tonnage, while NOC activity began to plateau, albeit at high historic levels. The demand in 2026 is now, somewhat unsurprisingly, heavily influenced by the duration of the war, with a worst case 12-month scenario potentially cutting the pre-war demand forecast by more than 50%. Moreover, the duration of the conflict is also likely to impact the pace of the return to normality, with a short conflict suggesting returning to pre-war levels already next year, while a prolonged conflict can lead to subdued activity throughout 2027 due to delays in final investment decisions and the constrained supply chain environment. On the supply side, the current situation will likely add to the already aging fleet in the region, which have reach