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The Strait of Hormuz, a narrow chokepoint that normally handles roughly a fifth of the world’s oil transit, has effectively become a cork in a bottle. The Iran conflict has shut down 9 million barrels per day of production capacity, and the two largest oilfield services companies on the planet are now telling investors that this isn’t a temporary disruption. It’s a structural shift.
SLB CEO Olivier Le Peuch and Baker Hughes leadership both signaled during their recent earnings calls that the conflict will fundamentally alter how nations think about energy security, exploration investment, and supply chain diversification.
The damage, by the numbers
SLB’s Q1 2026 results tell a story of immediate financial pain. Revenue from the Middle East and Asia segment dropped 10% to $2.69 billion, while net income fell 5.6% to $752 million. The company is forecasting a further hit of 7 to 9 cents per share on current-quarter earnings as the conflict continues to ripple through operations.
Baker Hughes, for its part, managed to post a 12% increase in adjusted net income to $573 million. But that headline number masks growing unease about the rest of the year. The company has expressed doubts about meeting its full-year guidance, a notable concession from a firm that typically projects confidence.
Qatar’s decision to declare force majeure on gas exports adds another layer of complexity. That move disrupted logistics chains and pushed raw material costs higher across the board, affecting not just the Middle East but global LNG markets that depend on Qatari supply.
Rystad Energy, the Norwegian research firm, estimates that post-conflict infrastructure repairs could run as high as $58 billion.
The pivot toward diversification
Both SLB and Baker Hughes now anticipate a wave of new upstream investment as countries scramble to reduce their dependence on Middle Eastern supply routes. North America stands to benefit significantly, with both companies projecting accelerated timelines for liquefied natural gas projects on the continent.
Le Peuch and his team at SLB project that 2027 and 2028 could see particularly strong growth as the industry responds to these disruptions.
What this means for investors
In the near term, the picture is genuinely ugly. SLB is guiding for earnings declines. Baker Hughes is hedging on whether it can hit its own targets.
A $58 billion infrastructure rebuild, accelerated LNG development in North America, and a global push toward energy supply diversification would collectively represent one of the largest investment cycles the oilfield services sector has seen in years. The companies positioned to capture that spending, SLB and Baker Hughes chief among them, could see revenue tailwinds stretching into the late 2020s.
The broader energy market is also contending with the demand-side effects of 9 million barrels per day going offline. Oil prices have absorbed a supply shock of historic proportions, and the downstream effects on everything from refining margins to petrochemical feedstocks will take quarters to fully materialize.
For energy investors, the key variable to watch isn’t just when the conflict ends. It’s whether the post-crisis investment cycle matches what industry leaders are projecting. If Le Peuch’s 2027-2028 growth thesis proves correct, the current earnings dip could look like a buying opportunity in hindsight.
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