Oil Services Industry Face Cost Pressures Amidst Iran Crisis

The Iran conflict is causing the oil services industry to increase its cost assessment for projects due to rising shipment, fuel and security costs, which are affecting its Middle Eastern contract performance, executives said at a conference in Abu Dhabi on Tuesday.

The Iran war, now in its ninth month, has damaged infrastructure and forced staff to evacuate in several countries. Threats to shipping via the Strait of Hormuz have made equipment deliveries difficult, increasing the cost of both labour and insurance.

“What we are facing now with our contracts in the Middle East is that logistics costs have increased - sometimes threefold. Fuel costs have doubled, labour costs have increased 30 to 40 percent,” said Alessandro Bernini, chief executive of Italian engineering group Maire.

The cost jump is eating into margins of service companies, raising the cost of projects and ultimately translating into higher energy prices and inflation around the world, he said.

This story was originally published by MarineLink. Read the full story at MarineLink →