Middle East War Takes Toll on SLB, Oil Industry

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Representatives from the energy sector told the Dallas Fed that conflict with Iran was making it difficult to make decisions. On Friday, SLB said it indeed was a challenging year so far.

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Middle East Income Slumps

Oilfield services firm SLB said Friday its quarterly performance was influenced heavily by the U.S.-Iranian war, and its U.S. operations were supported only by recent acquisitions.

"It was a challenging start to the year as widespread disruptions in the Middle East impacted our business," said Olivier Le Peuch, the chief executive officer of SLB, in a quarterly earnings-related conference call.

War erupted in the Middle East in late February with joint U.S.-Israeli airstrikes on Iran. Most of the heavy military action has ended, though a stand-off over the Strait of Hormuz continues to add geopolitical risk to the energy sector.

Industrial Info Resources has been monitoring events since the fighting began. A tally of impacts to the regional energy sector found parts of the Fujairah Refinery in the United Arab Emirates will remain closed until at least the end of the month because of impacts from the war.

For more information, see the Breaking Energy News article Middle East Oil and Gas Assets Impacted by Iran War and a detailed profile of the Fujairah Refinery.

SLB reported net income from Middle East operations of US$2.7 billion, down 13% from the same period last year. The company said it was impacted heavily by a decision from QatarEnergy to declare force majeure on exports of liquefied natural gas (LNG) and because of the shut-in of crude oil production in Iraq.

For more information, see the Industrial Info Resources News article QatarEnergy Offsets Regional Woes with U.S. LNG Offtake.

In North America, the company said revenue declined 4% year-on-year to US$2.17 billion, driven in large part by divestments in Canada. Offshore revenue was steady.

Second quarter offshore should get a lift, however, from a contract from Beacon Offshore Energy to help with high-pressure stimulation of the Shenandoah Field in the Gulf of Mexico. Production started in July and the first phase of operations should yield around 100,000 barrels per day (bpd). More information can be found in a detailed project report.

Much of the support elsewhere came from activity in data centers and from the third-quarter 2025 acquisition of ChampionX, after alleviating global concerns of a monopoly.

By the Numbers

• 3% y-o-y increase in total SLB revenue
• 4% slump in North America

Sector Woes are Spreading

SLB's performance, meanwhile, follows concerns expressed to pollsters from the Federal Reserve Bank of Dallas. Only 20% of the respondents said they expected the Strait of Hormuz to be open by next month, and most expressed frustration with the market volatility stemming from the conflict.

"The disruption this will cause to energy markets, and other macroeconomic measures will be significant," one respondent said. "The unpredictable nature of the current administration makes business modeling near impossible."

Total revenue for SLB was $8.7 billion over the three-month period ending March 31, down 11% from the prior quarter but up 3% year-on-year. For Le Puech, the outlook remains cautious.

"We entered 2026 anticipating that global liquid supply and demand would gradually rebalance throughout the year and into 2027," he said. "However, the conflict in the Middle East has accelerated this rebalancing while exposing critical vulnerabilities in the global energy supply chain."

Key Takeaways

• War makes for a rough quarter for SLB
• Confidence is fading quickly despite higher oil prices

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