Westwood Energy predicts a decline in global demand for onshore drilling rigs. On average, oilmen will use 4,413 rigs this year, which is 6% lower than the forecast made by experts at the end of last year. The drop is due to stagnant oil prices and high costs of servicing drilling rigs.
In the United States, there is a significant decline in demand for used equipment. This trend is expected to continue beyond 2024, with several other countries also projecting stagnant or declining demand for drilling equipment. Westwood Energy lowered its forecast for the period 2025-2028. to an annual average of 4,595 drilling rigs, earlier analysts predicted about 4,786 rigs used by oil and gas companies.
Despite the drop in demand, Westwood is eyeing a number of new deals and rig lease renewals during the first months of 2024. Regionally, the Middle East continues to dominate. For example, Saudi Aramco has entered into contracts for 23 onshore drilling rigs with Helmerich & Payne (H&P), Arabian Drilling and Sinopec as part of a program to increase unconventional gas production.
“The first months of 2024 are marked by the continued escalation of geopolitical tensions in the Middle East. However, this did not have a significant impact on commodity prices. Oil prices averaged $83/bbl this quarter, which is consistent with an average of $82/bbl in 2023. In addition, the OPEC+ production cut agreement remains in effect, extended through the first half of 2024.” ,” noted Westwood Energy.
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