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Trump Tariffs Squeeze Oil Sector, Not Fuel
27 Nov
Summary
- Tariffs increase costs for oil and gas infrastructure materials.
- Steel tariffs add 2-5% to offshore project expenses.
- Fuel and crude oil imports remain exempt from tariffs.
The Trump administration's tariff policies have created a complex financial landscape for the oil and gas sector. Despite explicit exemptions for crude oil, natural gas, and refined fuel imports, companies are experiencing rising costs due to duties on essential materials like steel and aluminum. These tariffs are directly affecting upstream and midstream operations, where infrastructure components such as pipes, tanks, and structural steel are critical.
The financial pressure is particularly acute for infrastructure development. Offshore Magazine reports that these tariffs are projected to increase offshore project costs by 2-5%. This added expense is causing numerous operators to delay or reconsider their capital expenditure plans, especially for multi-year and deepwater projects, introducing significant planning risks.
Furthermore, tariffs on goods from China impact crucial components like electrical gear, sensors, and advanced drilling controls. For an industry operating on tight budgets, even a few percentage points of cost inflation can render drilling programs economically unviable. This disparate impact highlights a disconnect where the raw materials for energy production are tariff-free, but the means to extract and process them face escalating costs.
