The tariff offensive that President Trump is leading against trade partners across the world will deal a blow to the oil and gas industry next year, according to a report by Deloitte.
The consultancy, as quoted by Reuters, noted that the oil and gas industry relies on international supply chains that stand to be affected by tariffs, leading to cost increases of between 4% and 40% for various materials and components such as steel and piping.
The U.S. oil and gas industry already warned about the adverse effect of tariffs on costs, citing a certain degree of dependence on imports with regard to some components. The quarterly Dallas Fed Energy Survey has reflected the concern, citing industry executives as complaining about rising costs that are pushing down activity in the oil patch. Not all of that cost inflation was attributed to the tariffs, but some noted the impact of higher import component prices on their overall costs.
According to Deloitte, the effect of the tariffs could lead to delays on final investment decisions and offshore project starts with a total estimated value of $50 billion.
“This shift is significant given the United States’ reliance on imports, with nearly 40% of oil country tubular goods demand in 2024 met through foreign sources,” the consultancy said, noting that these developments would make oil and gas companies prioritize boosting the resilience of their supply chains instead of cost control.
Earlier in the year, energy companies suffered a stock drop following President Trump’s initial announcement of tariffs on all trade partners, with the oil price rout making matters worse for the industry. The breakeven price for the majority of U.S. oil producers was estimated at $62 per barrel by Rystad Energy, with WTI currently trading at around $60 per barrel.
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