Leading oilfield services companies are anticipating a recovery in Middle East activity to support growth in the coming year, following several months of disruptions caused by regional conflicts. However, rising operating costs and ongoing geopolitical risks are tempering expectations for a swift rebound.
Schlumberger (SLB), Halliburton, and Baker Hughes all reported sequential revenue increases in parts of their Middle East operations for the third quarter, signaling a partial return of activity after earlier interruptions. Yet, year-on-year comparisons and forward guidance reveal uneven progress and continued uncertainty about when a more sustained recovery might occur.
Schlumberger’s Middle East revenue grew 13% sequentially in the third quarter, reflecting improved activity across the region. Despite this quarter-over-quarter gain, the company noted renewed disruptions toward the end of the period. On an annual basis, Schlumberger’s revenue in the division that covers Asia and the Middle East declined by 7%, stemming largely from a 12% drop in the Middle East — a crucial market for the company’s growth plans. Analysts at TPH Research project a gradual regional recovery beginning in the second half of 2027, potentially driving about 9% annual revenue growth for Schlumberger, excluding its Kelvion business segment.
Schlumberger CEO Olivier Le Peuch expressed cautious optimism, stating the region could become a significant growth driver if conflict de-escalates. He highlighted the potential for activity levels to surpass those seen before the disruptions, as countries work to restore production capacity and continue developing oil and gas resources.
Halliburton also posted sequential revenue growth of 8% in its Middle East and Asia operations in the third quarter, with stronger activity reported in Saudi Arabia and Kuwait. CEO Jeff Miller pointed to “multi-year demand growth for oilfield services” underpinned by efforts to restore output, rebuild inventories, and enhance energy security.
Meanwhile, Baker Hughes provided a more guarded outlook. The company expects a sequential decline in Middle East activity in the fourth quarter due to elevated logistics costs and ongoing supply chain challenges. Its Middle East and Asia revenue dropped to $1.26 billion in the third quarter from $1.45 billion a year earlier. CEO Lorenzo Simonelli acknowledged a meaningful improvement in regional conditions, noting that customers are focusing more on maximizing recovery rates and extending asset life.
The divergent forecasts among these leading providers underscore the uncertainties clouding the sector’s near-term prospects. While producers are poised to increase spending on services to restore production and improve recovery factors, geopolitical tensions and operational constraints could delay project activity and limit growth in the short term.
“Geopolitical uncertainty remains the biggest risk, especially the potential for further escalation in the Middle East or disruptions near the Strait of Hormuz,” said Jeremy Mullin, a stock strategist at Zacks Investment Research. He added that although currently depleted inventories support long-term demand, any renewed turmoil could postpone investment decisions and project timelines.