Baker Hughes Forecasts Decline in Oil and Gas Spending for 2026
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Baker Hughes announced on Monday that it anticipates a slight decrease in overall global capital expenditure by oil and gas companies this year. While investments are projected to rise in Latin America, North American land markets, and offshore Africa, this growth will likely be countered by reduced spending in the Middle East and Europe.
Ongoing geopolitical tensions in the Middle East, particularly between the United States and Iran, have kept energy markets on edge and prompted producers to adopt a more conservative approach to expanding drilling operations.
During an analyst call following Sunday’s earnings release, CEO Lorenzo Simonelli noted that clients are prioritizing production optimization from current assets to maintain operational flexibility amid shifting market dynamics.
Despite the cautious spending outlook, Baker Hughes shares jumped over 6% after the company surpassed quarterly profit expectations. Its industrial and energy technology (IET) division secured a record $7.1 billion in orders, doubling from the previous year. However, the company cautioned that ongoing regional conflicts could shave 1% to 2% off the IET segment’s revenue.
For the third quarter, Baker Hughes projects IET revenue to land between $3.17 billion and $3.47 billion, falling short of the $3.79 billion average estimate compiled by LSEG.
CFO Ahmed Moghal indicated that while the broader consequences of the Middle East conflict remain manageable, the company anticipates rising logistics costs and inflationary pressures at its regional facilities in the third quarter. He added, however, that strength in other global regions is expected to mitigate the impact of the Iran conflict.
In North America, the company foresees continued seasonal momentum in the third quarter, while Latin American growth will be spearheaded by activity in Mexico and Brazil.
To buffer against volatile crude prices, Baker Hughes is capitalising on stable expansion sectors, including power grid modernization and LNG infrastructure. The company plans to boost its gas turbine and generator production capacity by 2029, a move projected to unlock up to $5 billion in annual revenue from power systems.
