HOUSTON, Texas: Baker Hughes said on July 27 it expects global spending by oil and gas producers to decline modestly this year as weaker investment in Europe and the Middle East outweighs growth in Latin America, offshore Africa and North America's onshore market.

The oilfield services company said geopolitical uncertainty, including recurring tensions involving the United States and Iran, has made energy producers more cautious about increasing drilling activity.

"Customers remain focused on maximizing production from existing assets while preserving flexibility to respond to evolving market conditions," CEO Lorenzo Simonelli said during a conference call with analysts after the company reported earnings on July 26.

Shares of Baker Hughes rose more than six percent after it beat quarterly profit estimates, helped by industrial and energy technology (IET) orders that doubled from a year earlier to a record US$7.1 billion.

However, the company warned that its IET business is expected to take a one percent to two percent revenue hit from disruptions linked to the Middle East conflict.

Baker Hughes forecast third-quarter IET revenue of between $3.17 billion and $3.47 billion, below analysts' expectations of $3.79 billion, according to data compiled by LSEG.

"While the overall impact from Middle East disruptions should remain modest, we expect some increase in logistics and inflationary pressures at our regional facilities during the third quarter," Chief Financial Officer Ahmed Moghal said.

Moghal added that the effects of the Iran conflict are expected to be offset by stronger performance in regions outside the Middle East.

The company expects further seasonal recovery in North America during the third quarter, while Brazil and Mexico are projected to drive growth in Latin America.

Baker Hughes is also betting on continued demand for liquefied natural gas infrastructure and power grid upgrades to help offset volatility in oil prices affecting oilfield service providers.

The company said it plans to further expand its gas turbine and generator manufacturing capacity, with the additional capacity expected to come online by 2029, supporting an annual power systems revenue opportunity of nearly $5 billion.