JPMorgan: Not all oil stocks will benefit from the Middle East conflict

Investing.com - JPMorgan analysts said that not all oilfield services companies will benefit from the Middle East conflict, because the Iran war is disrupting the upstream spending mix in different ways, and the impact on each company in the sector varies.

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Schlumberger (SLB) was the first to set the tone, announcing ahead of time that first-quarter earnings per share will decline by $0.06 to $0.09. The company has suspended all staff from entering the conflict areas and reduced the scale of its operations in the region.

Oilfield services provider Baker Hughes was also affected similarly. JPMorgan estimates that its roughly $275 million in monthly revenue exposure in the Middle East was impacted in March, leading to an estimated revenue loss of about $60 million in the current quarter for its oilfield services and equipment segment, and a declining profit margin that may run in the 50-60% range.

The company has secured a 1.21 GW power generator order for Crusoe’s AI data center infrastructure and a 250 MW order from Twenty20 Energy, strengthening its “leverage on distributed power solutions is increasing,” the analyst said. They said the company’s full-year industrial and energy technology inbound order guidance of $15.01 billion remains unchanged.

Halliburton (Haliburton) also pointed to headwinds in Iraq and the complete suspension of offshore operations in Qatar, but the analyst said its first-quarter guidance “seems to remain intact; we think this is because the standards set at the beginning of the year were fairly conservative.”

Even though JPMorgan lowered its estimate for Halliburton’s second-half outlook due to the shadow of the conflict, the company “is actively seeking a price rebound in the terms through dedicated agreements,” the analyst noted.

While its North America (NAM) business is not directly affected, it is also not entirely immune. Large publicly listed and private exploration and production operators have taken a wait-and-see approach, as the conflict backdrop continues to evolve and there is little willingness to add additional activity.

Helmerich & Payne sees disruption showing up as a shift in capital expenditures to operating expenditures, driven by a combination of higher air freight costs, logistics frictions, and an increase in reactivated expenses in its international segment, which puts its profitability below the lower bound of its original gross margin guidance.

“Having said that, HP believes the long-term international growth outlook after the conflict is more positive because regional operators are looking to fill supply gaps, and BKR management echoed this view,” the analyst added.

On the other hand, JPMorgan expects Flowco’s quarterly performance to be broadly in line with expectations, due to its purely U.S. onshore positioning, but the company noted that one of its two early international partnerships is located in an affected area.

Overall, the analyst said they expect first-quarter results to give way to forward-looking guidance. “The development trajectory of the Middle East conflict, the pace of the North America pricing rebound, and the monetization path of distributed power assets represent key catalysts for the remainder of 2026.”

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