Offshore Oil Resilience: Diversification Cuts Risk of Price Shocks
The ongoing conflict between the US-Israel and Iran has shown that global energy markets are more resilient than expected, thanks to supply diversification.
Ongoing tensions in the Middle East had raised concerns about disruptions to oil supplies through the Strait of Hormuz, which accounts for around one-fifth of globally traded oil. However, despite some price increases, market resilience was not significantly impacted, indicating that global oil markets have become more geographically diversified and competitive.
This diversification is largely due to advances in offshore production technology, which has made it possible to extract oil from deeper waters. Today, around one-third of global oil output comes from offshore operations, with deepwater resources expected to contribute a significant share of future supply growth.