Top oilfield services companies are counting on a recovery in Middle East activity after months of disruptions to support growth next year, but rising operating costs and renewed flare-ups are tempering the near-term outlook.
SLB, Halliburton and Baker Hughes all reported sequential revenue growth in parts of their Middle East businesses in the third quarter, as activity rebounded from conflict-related interruptions.
Still, year-on-year metrics and company forecasts indicate that activity remains uneven, while the timing of a sustained recovery is uncertain.
SLB’s Middle East revenue rose 13% sequentially in the third quarter as activity improved across the region, but the world’s top oilfield services provider flagged renewed disruptions in the final weeks of the period.
Despite the quarterly improvement, SLB’s revenue from the division that includes Asia fell 7% from a year earlier, primarily reflecting a 12% decline in the Middle East, central to the company’s growth prospects.
TPH Research expects a gradual regional recovery, predicted to begin in the second half of 2027, to help drive SLB’s annual revenue growth of about 9%, excluding the impact of its Kelvion business.
CEO Olivier Le Peuch said the region could provide an additional growth catalyst if the long-drawn conflict eases.
He said activity had the potential not only to recover but “to exceed previous activity pre-conflict,” as countries restore production capacity and continue developing oil and gas resources.
Halliburton’s Middle East and Asia revenue rose 8% sequentially, driven by higher activity in Saudi Arabia and Kuwait.
CEO Jeff Miller signaled “multi-year demand growth for oilfield services” from efforts to restore production, rebuild inventories and strengthen energy security.
Baker Hughes expects Middle East activity to fall sequentially in the fourth quarter as higher logistics costs and supply-chain challenges weigh on operations.
Its Middle East and Asia revenue fell to $1.26 billion from $1.45 billion a year earlier.
CEO Lorenzo Simonelli said the company had seen “a meaningful improvement in the Middle East,” with customers increasingly focused on maximizing recovery and extending asset life.
The contrasting outlooks underscore the uncertainty facing the sector.
Producers may need more services to restore output and improve recovery, but geopolitical uncertainty and operating constraints could delay spending and limit near-term growth.
“Geopolitical uncertainty is the biggest risk, particularly further escalation in the Middle East or disruption around the Strait of Hormuz. While depleted inventories support long-term demand, renewed turmoil could delay projects,” said Jeremy Mullin, stock strategist at Zacks Investment Research.
(Reporting by Arunima Kumar, Sumit Saha, Pranav Mathur and Vallari Srivastava in Bengaluru; Editing by Sriraj Kalluvila)