A report published by Deloitte showed that sweeping tariffs imposed by US President Donald Trump would raise operating costs, disrupt supply chains, and weaken investment momentum in the oil and gas industry in 2026.
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Why is it important
The energy industry relies heavily on global supply chains and internationally sourced materials such as drilling rigs, valves, compressors and specialty steel. US tariffs on these components and other key input materials, including steel, aluminum and copper, could increase costs of materials and services across the value chain by 4% to 40%, potentially squeezing industry margins, the report said.
Context
The United States imposed tariffs on a wide range of imports, including 10% to 25% on raw materials not covered by the US-Mexico-Canada Agreement and 50% on steel, aluminum and copper. Deloitte said tariffs could reshape the cost structure of the oil and gas industry and increase uncertainty about sources of raw materials.
Key points
Inflation and financial uncertainty caused by tariffs could push final investment decisions (FIDs) and new offshore projects worth more than $50 billion to 2026 or later. As a result, operators may have difficulty recovering higher costs, which could ultimately dampen investment activity in this sector. As input costs rise, Deloitte expects oil and gas companies to renegotiate contracts with escalation and force majeure clauses to share risk and limit exposure to volatility.
What’s next
Deloitte said continued disruptions could push companies to prioritize supply chain flexibility at the expense of lower-cost sources, shift to domestic or non-tariff-bound suppliers and use foreign trade zones or reclassify tariffs to manage tariffs. “This shift is important given the United States’ reliance on imports, with nearly 40% of pipeline goods demand in oil states in 2024 being met through foreign sources.”
Source: Market intelligence platform IndexBox
