Rig prices in the Middle East have fallen by 20% since the end of 2023; Reaching its lowest levels in the past seven years.

This decline is mainly due to Saudi Aramco canceling its plans to expand its production capacity by one million barrels per day in late January 2024.

The average price of a self-elevating offshore drilling rig in the Middle East, capable of drilling in 361-400 feet of water, was about $120,000 per day in April and May 2024.

This figure represents the lowest level since July 2023, while it had reached its highest level in seven years at $145,000 per day in December 2023 and January 2024.

Petrodata Riggs, a subsidiary of S&P Global, expects the average price of drilling rigs in the Middle East to range between $110,000 and $140,000 per day by the end of 2024, based on current demand.

Demand for drilling rigs in the region is likely to decline to an average of 153-160 rigs over the next two years, with the possibility of expiring contracts for 36 self-elevating drilling rigs with Aramco in the next two years.

Aramco's cancellation of its plans to expand its production capacity led to a surplus of drilling rigs in the region. Which led to lower prices.

This also led to energy services companies reducing the deployment of their rigs in Saudi Arabia, and a negative impact on Saudi contractors and drilling rig suppliers who were heavily dependent on Aramco as a major customer.

The decline in drilling rig prices in the Middle East shows a decline in drilling activity in the region, however, some opportunities remain for companies that are able to adapt to the changing market and diversify their customers into other regions.