Quarterly Summary
4Q 2025 saw average Brent prices of US$63.63/bbl, a 14.7% year-on-year price contraction. This was a result of oversupply averaging 1.9mmbpd in 4Q 2025, as well as an anticipated exacerbation of the supply glut in 1H 2026, potentially reaching over 3mmbpd (the highest since 2020 and the Covid pandemic). This is a result of buoyant supply, including the complete rollback of OPEC+’s voluntary output reduction, meeting relatively sluggish demand growth, putting downward pressure on pricing. The annual drop in Brent oil prices from $80.52 in 2024 to $69.14 in 2025, highlights the market’s nervousness. However, geopolitics have so far overshadowed the potential impact of the current oil supply glut, with oil prices trading close to $70/bbl at the end of January 2026.
The first major event of the year saw the escalation of tensions in Venezuela culminate in a US military-led capture of President Maduro. This stoked some early fears over further supply additions; however, it is far too early to expect a glut of oil from the country. The characteristic extra-heavy oil of Venezuela, coupled with badly neglected infrastructure, with many land rigs reportedly stripped for parts, mean a huge investment will be required.
Geopolitical tensions also brewed in Iran, driven by growing civil unrest and warnings of military strikes from the US. So far, however, this ongoing uproar has not disrupted oil and gas flows, and the regime continues to commit to long-term brownfield and exploratory drilling, as evidenced by the National Iranian Oil Company signing a five-year, 20-rig, US$1 billion rig-leasing contract in mid-January 2026.
It remains to be seen however how long an oil price rally will last given the fundamental issue of oversupply. The uptick in prices seen so far is not expected to be sufficient to change Westwood’s current rig demand outlook, which could see its fourth year of decline in a row, with declines in the US and Latin America, counterbalanced somewhat by growth in the Middle East.
Global Rig Demand 2023-2026
Source: Westwood Global Land Rigs Report November 2025 Edition
The 4Q 2025 edition of the newsletter includes a more in-depth overview of rig demand, as well as key updates on rig contracting and field development worldwide. Saudi Arabia remains at the forefront of this, with Saudi Aramco sending reactivation and contract extension notices to several previously suspended rigs in 4Q 2025. Aramco also saw production start-up of Saudi Aramco’s Jafurah unconventional gas project in December 2025. This edition also includes details on the latest super-spec rig to be transported from the US to a different market, continuing a trend of contractors seeking new opportunities for their underutilised lower-48 rig fleets.
In the geothermal sector, the University of Aberdeen received a US$1.3 million funding package to launch the Aberdeen Geothermal Feasibility Pilot. While on the geothermal rig contracting side, H. Angers Sohne signed a three-year framework drilling rig contract to support Innargi’s geothermal district heating projects in Denmark and Germany.
Lastly, M&A activity remained strong in 4Q 2025, led by the USA and Australia. The most prominent rig-related transaction was ADNOC Drilling’s US$204 million acquisition of an 80% stake in MB Petroleum Services, a contractor with operations in Oman, Kuwait, Saudi Arabia and Bahrain.
Ben Wilby, Manager – Onshore Energy Services
[email protected]
Michela Francisco, Research Analyst – Onshore Energy Services
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