Middle East Conflict Reshaping Global Oil and Gas Insurance Market
Just as global insurance companies were beginning to navigate the increasing ESG (Environmental, Social, and Governance) pressures that emerged at the start of this decade, the Middle East conflict has dramatically disrupted the insurance landscape for upstream oil and gas projects. The world's lowest-cost oil and gas production region has transformed into a conflict zone since late February, exposing war risks and causing significant delays or increased costs for drilling and construction projects in the sector.
Following five months of instability for new oil and gas projects in the Middle East, major insurance conglomerates have shifted their focus to insuring drilling and construction projects outside this lucrative yet volatile region. A competitive race is now underway to secure insurance business in oil and gas basins less affected by the ongoing geopolitical escalation.
Insurers Compete for Non-Middle East Project Coverage
Upstream oil and gas insurance premiums outside the Middle East have decreased by approximately 25% so far this year, insurance brokers report to Financial Times. In some cases, certain insurers have reduced premiums by up to 50%, even accepting short-term losses, according to industry insiders speaking with FT.
The rationale is clear – as oil and gas companies increase exposure to basins and projects outside the Middle East, insurance firms are competing for market share in the now-reduced global upstream development projects that are not located in conflict zones.
"Upstream [energy] has been a very profitable line of business for the market for many years," Rupert Mackenzie, natural resources insurance broker at WTW, told FT.
"The view of insurers is that this is a line of business they want to maintain exposure to," this broker added.
Declining Premium Trends
Mackenzie's colleagues at WTW stated in their April-published Energy Market Review 2026 report that "premiums are at 'rock bottom' levels." This year, "15-20% reductions are available for core upstream risks with clean loss histories and significant premium adjustments, with 40% reductions still observed in special cases," WTW noted in the annual report released a month and a half after the Iran conflict began.
"The pricing trend is unmistakable – even after a decade of soft market conditions, the market is still finding new levels of reduction," according to WTW.
The Iran conflict and the emergence of the Middle East as an active war zone have driven the world's largest international oil and gas companies to pursue upstream projects beyond this region, Mackenzie told FT.
Major Oil Companies Expand Exploration Beyond Middle East
Amid Middle East conflicts, major oil corporations are attempting to minimize losses from reduced production volumes and undelivered oil barrels due to the crisis in the Hormuz Strait. They are betting on high-impact exploration and upstream projects in hotspots like Guyana, Suriname, Namibia, Brazil, Turkey, and Cyprus, to name just a few.
Exxon and Chevron are increasing their offshore oil barrels discovered in Guyana. Chevron alone is expanding its operations in Venezuela, where the Trump administration hopes American companies will increase oil production and exports to the United States.
In turn, Exxon plans to invest billions of US dollars into offshore oil fields in Nigeria. Exxon is progressing with the $7-8 billion Owowo offshore project in Nigeria, "considering making a final investment decision (FID) as early as next year," Hunter Farris, Senior Vice President of Offshore Production at ExxonMobil Upstream Company, said in April.
This is just one of Exxon's new projects in Nigeria, the African oil producer, which has increased crude oil sales to Asia in recent months as refineries were shocked by supply losses from the Middle East.
ExxonMobil's Nigerian subsidiary and its partners committed $1 billion this month to activities on the block for the Usan Infill project at OML 138. The project will release an additional 40,000 crude oil barrels within 18 months. It also "marks renewed interest and hope for Nigeria as the first major offshore project for Esso since 2016," the Nigerian Upstream Petroleum Regulatory Commission NUPRC said in early July.
New Projects by Industry Giants
- Exxon and Chevron focusing on Guyana with billions of crude oil barrels discovered offshore
- Chevron expanding operations in Venezuela
- Exxon investing $7-8 billion in the Owowo offshore project in Nigeria
- Excamon committing $1 billion to the Usan Infill project in Nigeria
- BP acquiring three offshore exploration blocks in Namibia
- TotalEnergies signing a Memorandum of Understanding with TPAO to evaluate exploration opportunities in the Black Sea
Shale Oil Development Trends Outside the US
Companies are also increasingly showing interest in shale oil opportunities outside the United States, with Argentina, China, Turkey, and Australia attracting attention for onshore resource development far from the Middle East.
Value Creation from Oil and Gas Exploration
Oil and gas exploration has generated significant value for the industry in recent years. From 2021 to 2025, the sector has created $54 billion in value after subtracting $97 billion in exploration spending, with Brent prices at $65/barrel, an analysis by energy consulting firm Wood Mackenzie showed in April.
At Brent prices of $85, the value creation more than doubles to $120 billion, according to WoodMac.
Summary of Oil and Gas Insurance Market Trends
| Timeline | Trend | Impact |
|---|---|---|
| Pre-conflict | ESG pressures | Oil and gas insurance market under pressure |
| Since Feb 2024 | Middle East conflict | Increased risks, project delays |
| 2024 | Declining insurance premiums | 25-50% reduction for projects outside Middle East |
| 2021-2025 | Exploration value | $54 billion created (Brent at $65) |
| 2021-2025 | Exploration value | $120 billion created (Brent at $85) |
Conclusion
The Middle East conflict has created significant shifts in the global oil and gas insurance market, prompting insurance companies to compete aggressively for market share in projects located outside conflict zones. Simultaneously, major oil corporations are redirecting investments to new hotspots like Guyana, Namibia, and Nigeria, creating both opportunities and challenges for the global energy market. This trend is expected to continue in the medium term, with insurance companies continuing to adjust their strategies and premium rates to adapt to the changing geopolitical landscape.
The oil and gas industry continues to demonstrate its ability to generate substantial value, particularly when oil prices remain at elevated levels, enabling companies to continue investing in exploration and developing new projects, even while facing increasing geopolitical risks.