JPMorgan's research team says the unfolding conflict in the Middle East is producing a patchwork of outcomes for oilfield services companies, rather than a broad-based windfall. Analysts point to specific operational constraints, revenue exposures and cost pressures that are cutting differently across the sector.
Schlumberger (SLB) set an early tone when it pre-announced an earnings-per-share shortfall of $0.06 to $0.09 for the first quarter. The company has suspended all personnel movement into the conflict zone and has scaled back its regional footprint, moves that JPMorgan cites as evidence of direct operational disruption.
Baker Hughes is facing a comparable effect. JPMorgan estimates Baker Hughes had roughly $275 million of monthly revenue exposure to the Middle East that was impacted in March. That exposure translated into an estimated $60 million revenue reduction to its oilfield services and equipment segment for the quarter, with decremental margins the analysts put in the 50-60% range.
At the same time, Baker Hughes recorded orders that point to strengthening demand in distributed power. The company booked a 1.21 gigawatt generator order for Crusoe's AI data center infrastructure and a 250 megawatt award from Twenty20 Energy, actions JPMorgan says reinforce its "strengthening leverage to distributed power solutions." JPMorgan also noted that Baker Hughes' full-year industrial and energy technology inbound order guide of $15.1 billion remains intact.
Halliburton reported operational headwinds tied to Iraq and a full shutdown of Qatar's offshore operations. Despite those disruptions, JPMorgan observed that the company's first-quarter guidance "appears intact, a function of what we view as a conservatively set bar heading into the year." The analysts did trim their second-half estimates for Halliburton because of the conflict overhang, but they also flagged that Halliburton is "actively pursuing pricing recovery through dedicated agreement openers."
North American (NAM) operations are viewed as relatively insulated from direct regional exposure, but JPMorgan cautions they are not immune to secondary effects. Major public and private exploration and production operators have largely adopted a wait-and-see stance amid the evolving conflict backdrop, with limited appetite for adding incremental activity.
Helmerich & Payne has seen the impact manifest through higher air freight costs, logistics friction and a shift in the capex-to-opex mix caused by greater reactivation expenses in its international segment. Those pressures pushed profitability below the low end of the company's original gross margin guide. Still, JPMorgan quoted Helmerich & Payne management as seeing a more constructive longer-term international growth outlook postconflict, as regional operators look to backfill supply shortfalls - a view the analysts say is echoed by BKR management.
Flowco, by contrast, is expected to report a largely in-line quarter with analysts attributing that to its pure-play U.S. onshore positioning. JPMorgan did note, however, that one of Flowco's two early-stage international partnerships sits in the affected region.
Overall, JPMorgan's team suggested first-quarter prints are likely to be less consequential than forward guidance. The analysts highlighted three key catalysts to watch for the remainder of 2026: "the trajectory of the Middle East conflict, the pace of NAM pricing recovery, and the monetization pathway for distributed power assets representing the key catalysts for the balance of 2026."
Clear summary
The Middle East conflict is producing uneven effects across oilfield services and related industrials. Companies with direct regional exposure have recorded suspended movements, revenue impacts and higher logistics costs, while firms with U.S.-onshore emphasis or strengthened distributed power orderbooks are facing a different mix of risks and opportunities. Forward-looking guidance and the conflict's progression will likely drive market reactions for the rest of 2026.
Key points
- SLB pre-announced a first-quarter EPS miss of $0.06 to $0.09 and has halted personnel movement into the conflict zone and reduced its footprint.
- Baker Hughes faced an estimated $60 million quarterly revenue hit to its oilfield services and equipment segment after about $275 million of monthly Middle East exposure was affected in March; decremental margins are estimated at 50-60%.
- Orders for distributed power at Baker Hughes - including a 1.21 gigawatt generator for Crusoe and a 250 megawatt award from Twenty20 Energy - support a narrative of growing leverage to distributed power solutions, with a $15.1 billion full-year inbound order guide still intact.
Risks and uncertainties
- The ongoing path of the Middle East conflict, which directly affects operations, personnel movement and regional activity - impacting oilfield services, upstream operators and international logistics.
- The pace of pricing recovery in North American operations, which will influence margins and activity levels for drillers, service companies and E&P customers.
- The ability to monetize distributed power assets, which bears on the industrial and energy technology segment outlook and on companies pursuing power-related growth avenues.