Oil prices continue to move within a tight range around $60/bbl for WTI. While this price level is more than sufficient for oil and gas operators with activity in the deepwater GOA to make a profit in the region, it limits additional investment to increase production. This is not a new trend, going back to 2019, the International Energy Agency (IEA) reports that only around 10% of all annual upstream oil and gas investment has been allocated to meet future demand growth, as 90% of total upstream investment has been used to replenish production declines.

Additionally, the CEO of Saudi Aramco recently stated that industry-wide investment in upstream oil and gas is down 20% in 2025 compared to previous years. Both of these are staggering figures, and they highlight the trend that low oil prices beget reduced investment, which in turn reduces production growth. As production growth declines, there is a severe risk of price spikes if and when oil demand increases.

Very recently, many experts who study oil demand forecast that peak oil demand would occur around 2030. However, due to many emerging factors, including what is estimated to be massive new energy demand to support AI data centers, the IEA now estimates that oil demand will not peak until 2050 and that an additional 18 million barrels per day will be needed simply to meet existing demand. As existing proven reserves decline and demand continues to grow, it is estimated that an additional 25 million barrels per day in new projects over the next ten years will be required.

Declines in existing production and growth in demand create a strong environment for increased activity, a large part of which must come from the deepwater GOA. Though activity levels in the GOA have remained relatively flat over the past several years, it is reasonable to anticipate an increase as part of the overall oil and gas industry’s need to replenish proven reserves and meet higher demand than previously anticipated.