Offshore energy markets began 2019 in an unpredictable atmosphere, as policymakers in Washington and analysts across the industry signaled another round of disruption for both offshore wind and oil and gas sectors. Within days, President Donald Trump moved to curtail elements of US offshore wind build out for national security reasons while research indicated capital is set to return toward upstream oil & gas projects instead of low carbon projects in 2026.
United States Administration suspends offshore wind projects on security grounds
Washington's announcement was the initial shock for offshore renewables: five offshore wind projects on the US East Coast had been put on pause due to national security concerns; construction activity for such schemes had been scheduled to advance through 2026.
According to industry reports, the 22 December federal decision to suspend offshore wind construction generated rapid legal responses from project sponsors. Developers claim that this halt compromises long-term lease stability and threatens supply chain confidence during an upsurge in US market activity; fabrication yards, vessel operators, turbine manufacturers are heavily exposed. Offshore service providers now face idle installation vessels as well as potential changes in campaign work schedules that could impact utilisation rates and day rates well into spring campaign windows.
Federal pause causes ripple effect throughout offshore supply chains
Construction delays have immediate repercussions for regional offshore supply chains that were planning on supporting multi-year build programs. Vessel operators, foundation fabricators and cable lay contractors had expected steady work from these projects but are now reviewing fleet deployment plans and yard workloads accordingly. Furthermore, this interruption increases uncertainty regarding port investments and transmission grid upgrades related to East Coast pipeline expansion projects.
Developers and state level authorities are pressing for clarity on the security review process and mitigation measures that could allow projects to resume. Industry sources warn of extended delays impacting financing terms as lenders reprice policy risk and reassess offtake contracts tied to specific commissioning dates. Maritime stakeholders view this episode as evidence that offshore wind project execution risk now encompasses not just inflation and supply chain bottlenecks, but also geopolitical and security scrutiny.
Investment has continued to shift away from low carbon projects toward upstream projects.
Wood Mackenzie research indicates that, alongside the regulatory shock to US offshore wind, portfolio recalibrations that characterized 2025 will continue into 2026, with investment shifting back toward upstream oil and gas ventures from low carbon ventures. International oil companies as well as national oil companies alike prioritising advantaged barrels with short cycle returns while reinforcing offshore and deepwater developments that clear internal hurdle rates under conservative price assumptions.
Wood Mackenzie notes that capital discipline remains tight, yet when companies do invest, companies increasingly favor upstream projects, including selective offshore expansions, over more capital intensive low carbon initiatives with longer payback periods. This trend stems from an overall market environment in which sanctions limited supply from some producers while rising output from the Atlantic Basin Triad of United States, Brazil and Guyana led to an oil surplus and downward price pressures - leading offshore operators to prioritize low cost, high margin assets capable of withstanding longer low oil price environments.
Impact for offshore oil, gas, and maritime services providers
A shift in investment priorities should help secure an impressive pipeline of offshore oil and gas work, particularly in basins where breakeven costs have been driven down by standardised subsea systems and larger floating production units. Analysts point out projects in Brazil and Guyana as examples of deepwater developments that remain cost-competitive even as companies reduce exposure to frontier exploration or high cost acreage.
For maritime service providers, an increase in upstream capital expenditure relative to weakening low carbon outlook could translate to more stable demand for drilling rigs, subsea vessels and construction support tonnage than wind installation units in the near term. However, as energy transition pressures continue and financing conditions differ depending on emissions profiles of offshore portfolios - creating structural challenges within this industry sector.
Offshore winds appear paradoxical to their role.
Even after US policy setback, global offshore wind activity remains elevated by historical standards. Industry data reveal that around 53 gigawatts of offshore wind capacity is either under construction or post final investment decision, reflecting earlier investment decisions and auction rounds rather than fresh enthusiasm. According to the Global Wind Energy Council's 2024 construction and auction data report, 8 gigawatts were installed during 2024 alone with total installed offshore capacity reaching an approximate 83-gigawatt level.
Analysts caution, however, that macroeconomic headwinds, supply chain constraints and policy uncertainty have significantly dampened short term expectations of floating offshore wind power deployment. Forecasts for near term deployments were scaled back due to challenges associated with procuring offtake contracts, permits and financing - compounded with fresh pauses on several US East Coast projects increasing concerns that policy uncertainty may further complicate project economics while delaying efforts at creating a resilient, globally diverse supply chain for offshore wind energy production.