A recent report by Deloitte highlights that sweeping tariffs imposed by the US government under President Donald Trump are poised to significantly impact the oil and gas industry by 2026. The energy sector, which depends extensively on global supply chains for essential materials like drilling rigs, valves, compressors, and specialized steel, faces rising operational costs and disrupted supply chains due to these tariffs. The report estimates that material and service costs across the value chain could surge by 4% to 40%, potentially squeezing industry margins. The US has levied tariffs ranging from 10% to 50% on key imports such as steel, aluminum, and copper, as well as crude feedstocks not covered by the United States-Mexico-Canada Agreement. These measures are expected to reshape the industry’s cost structure and introduce uncertainty in feedstock sourcing. Additionally, inflation and financial instability triggered by the tariffs may delay final investment decisions (FIDs) and offshore greenfield projects worth over $50 billion until 2026 or later. Operators may find it challenging to offset higher costs, which could dampen investment activity in the sector. To mitigate risks, oil and gas companies are likely to renegotiate contracts with escalation and force majeure clauses. Moving forward, companies may prioritize supply chain resilience over cost efficiency, shifting to domestic or non-tariffed suppliers and leveraging foreign trade zones or tariff reclassification to manage duties. This shift is particularly significant given the US’s reliance on imports, with nearly 40% of oil country tubular goods demand in 2024 met through foreign sources.
Tariffs to raise costs, delay oil and gas projects in 2026, report says
