Zurich’s proactive claims leadership in a reshaping upstream landscape

Demand up, drilling down

Global upstream oil and gas is experiencing a clear imbalance. Demand remains strong, but drilling activity is not increasing at the same pace. The 2025 NOV Rig Census highlights an ageing and capacity constrained global rig fleet, with operators prioritising efficiency and consolidation over new investment (Drilling Contractor, 2025). Rising costs and policy uncertainty continue to slow development across key regions (Deloitte, 2025). Supply chains also remain under strain due to tariffs, freight volatility and limited fabrication capacity (EY, 2026).

The full impact of the Middle East conflict is yet to be felt across the upstream industry with decision makers reluctant to commit to high CAPEX projects as the oil price remains volatile and outlook is uncertain. This article focuses on aspects beyond the conflict.

These pressures are widening the gap between market demand and drilling supply, which is influencing the duration and cost of losses across the sector.

Zurich’s claims team focuses on providing fast responses and the right support to customers when incidents occur by understanding the issue clearly from the start, guiding customers through each step of the process, connecting our global claims teams to share expertise and ensure consistency, and working alongside loss adjusters and brokers to support complex technical decisions.

The U.S. as a microcosm of global pressures

In the U.S., the world’s most active upstream market, these pressures are especially visible. Despite policy support for greater production, operators have struggled with equipment scarcity, cost inflation and longer lead times (Drilling Contractor, 2025).

Similar constraints now characterise activity in the North Sea, West Africa, Brazil and Asia-Pacific, increasing the potential impacts of a claim.

Equipment scarcity, tariffs and fabrication bottlenecks

Equipment availability has become one of the most material constraints on drilling. Contractors report dramatically longer lead times for rigs, pumps, generators and mobile plant, increasing machinery breakdown and inland marine exposure.

The 2025 expansion of U.S. Section 232 tariffs exacerbated this pressure. Duties on steel and aluminium rose to as much as 50%, sharply inflating OCTG costs, especially given U.S. reliance on imported tubular goods. Offshore suppliers have reported that higher steel prices and slower fabrication schedules have already added 2-5% to Gulf of Mexico project costs (Offshore Magazine, 2025).

Global fabrication yards remain congested due to years of underinvestment and overlapping demand from LNG and renewables. Lead times for high spec equipment have extended from 8-12 weeks to 20-40 weeks, while subsea components frequently exceed 12-18 months.

These delays force operators to keep ageing assets running longer, raising the risk of mechanical failure and elevating both severity and business interruption exposure.

Jones Act Logistics: A structural severity driver

U.S. logistics constraints remain an overlooked but significant source of loss severity. The Jones Act restricts domestic maritime transport to U.S. built, owned, flagged and crewed vessels, limiting fleet capacity and raising costs. Transporting petroleum from the Gulf Coast to the East Coast on Jones Act compliant vessels can cost up to three times more than equivalent international shipping (Stockton University Panel, 2025).

This creates operational challenges:

• Domestic redistribution becomes more expensive than export routes
• Inventory cannot be rebalanced quickly during outages or storms
• Emergency mobilisation becomes slower and costlier

For claims, this translates into higher day rates, longer mobilisation windows and more severe pollution, salvage and energy property losses. Delay is now a material driver of escalation.

A combined structural impact on claims

The combined effect of equipment scarcity, tariff inflation and logistics bottlenecks creates:

• Higher repair and replacement costs
• Longer business interruption
• More frequent mechanical breakdown events
• Greater severity volatility

Losses today are shaped less by the initial failure and more by the operational context surrounding it.

Workforce realities: ageing crews, under skilling and human factor losses

Labour constraints remain one of the most persistent upstream challenges. U.S. crude production reached 13.58 million barrels per day in June 2025, yet industry employment is roughly 20% lower than a decade ago (Bloomberg, 2026).

Younger workers remain reluctant to enter the industry, shrinking the pipeline of experienced drill crews, floorhands and operators. Regions like Texas, the Bakken and the Appalachian Basin increasingly rely on less experienced labour, raising exposure during high risk tasks such as rig moves, lifting operations, heavy vehicle driving and well control.

This gap between operational complexity and workforce experience is now a major driver of incident severity.

Zurich’s strengthened claims strategy: focused, practical, customer driven

1. Understanding the issue and guiding customers clearly through the process

Zurich has a strong technical background in handling complex energy claims, supported by experienced claims professionals across multiple regions. From the first notification of loss through to settlement, the team focuses on clear, straightforward communication. Claims handlers work closely with brokers, loss adjusters and customers to support. The aim is to reduce uncertainty, provide reassurance and support customers.

2. Connecting global claims teams into one coordinated response

Zurich has created a global claims network that links knowledgeable handlers across all regions. Whether a claim arises in the Gulf of Mexico, the North Sea or West Africa, customers benefit from fast access to claims professionals who share insight and best practice. This coordinated approach supports quicker decisions, consistent service and a smoother claims experience everywhere Zurich operates.

3. Using Zurich Resilience Solutions (ZRS) to strengthen claims outcomes

ZRS engineers play a key supporting role on complex losses. Their expertise helps assess equipment condition, consider potential failure scenarios and inform repair or replacement strategies. Their input improves technical understanding, supports claims decision making and provides valuable guidance to customers during difficult operational situations.

Conclusion

The upstream sector faces structural pressures, from supply chain delays to workforce shortages, that heighten both the frequency and severity of losses. Zurich’s claims approach, grounded in global coordination, engineering and technical capability and clear customer guidance, ensures that even in a challenging operating environment, customers receive the support they need to recover quickly and confidently.