Leading oilfield services providers SLB and Baker Hughes expect a rise in global spending on oil exploration and production, as supply disruptions linked to the Middle East conflict underscore the need for greater investment, particularly in North America, according to Reuters.
The ongoing US -Israeli conflict with Iran has disrupted flows through the Strait of Hormuz, halting around 20% of global oil trade and shutting in approximately 9 million barrels per day (mmbbl/d) of production. The disruption has forced countries across Asia and Europe to seek alternative supplies, while intensifying focus on energy security and diversification of supply sources.
Baker Hughes CEO Lorenzo Simonelli indicated during a post-earnings call that the current environment is reinforcing the need for increased upstream investment to expand production capacity and meet demand. He also pointed to the potential for faster investment decisions in liquefied natural gas projects, especially in North America.
SLB CEO Olivier Le Peuch similarly highlighted expectations of stronger investment momentum once the conflict eases, with countries likely to prioritize supply diversification and exploration activity. He noted that spending could increase across North America and Latin America, including deepwater offshore developments, and added that oil prices are expected to remain elevated compared to pre-conflict levels.
Meanwhile, Halliburton warned that ongoing disruptions tied to the conflict and the closure of the Strait of Hormuz could reduce current-quarter earnings per share by 7 to 9 cents. It also flagged higher logistics and raw material costs resulting from the rerouting of supplies.
