Oil services spell out initial cost of Trump’s tariffs
Market: Crude oil, Natural gas 28/04/25 argusmedia
The world's top oil field service firms are starting to count the cost of US president Donald Trump's unprecedented trade wars, amid a challenging outlook caused by tariff-related volatility that has sent oil prices lower and sparked fears of a recession.
Halliburton forecasts a 2-3¢/share hit to second-quarter results, with its completion and production unit — which includes the hydraulic fracturing (fracking) business — accounting for 60pc of the expected fallout, and drilling and evaluation making up the rest. Baker Hughes says full-year profit could be reduced by $100mn-200mn, assuming that the tariff levels in effect under Trump's 90-day pause remain in place for the rest of the year.
While SLB, the world's biggest oil field contractor, says it is too early to fully assess the potential impact of tariffs, the company is taking proactive steps to shore up its supply chain and manufacturing network, as well as pursuing exemptions and engaging with customers to recover related cost increases.
Crude prices slumped to a four-year low earlier this month after Trump's tariffs threw global markets into a tailspin. The oil field service industry argues that it is better prepared for a downturn this time around, given a focus on capital discipline and returns in recent years. Yet the double blow of tariffs and an accelerated return of Opec+ barrels to the market could cause further headaches — even as firms move to mitigate the impact.
"We need a bit more clarity and stability in the structure of tariffs so that we can really understand what levers we can pull and then what the overall outcome is going to be," Halliburton's chief financial officer, Eric Carre, says. "There's just a lot of moving parts right now."
Global upstream spending will be "down by high-single digits" this year, Baker Hughes says. The company forecasts a low-double digit decline in North America spending by its clients, and a mid-to-high single-digit drop internationally.
"A sustained move lower in oil prices or worsening tariffs would introduce further downside risk to this outlook," chief executive Lorenzo Simonelli argues. "The prospects of an oversupplied oil market, rising tariffs, uncertainty in Mexico and activity weakness in Saudi Arabia are collectively constraining international upstream spending levels." While Baker Hughes' "strong weighting" to international markets and a diversified and local supply chain provide a cushion, the company is seeking to limit the tariff impact for its industrial and energy technology division by exploring domestic procurement alternatives and improving its global manufacturing footprint.
The Wright stuff
Liberty Energy, whose former chief executive Chris Wright was picked by Trump to serve as his energy secretary, expects modest tariff-related inflationary impacts on engines and other electric components, some of which are being offset by lower prices or volume discounts. "All said, we don't anticipate a significant direct impact from tariffs at the moment," chief financial officer Michael Stock says.
Shale producers are also starting to figure out how they may be affected, with Diamondback Energy reviewing its operating plan for the rest of the year. "Should low commodity prices persist or worsen, Diamondback has the flexibility to reduce activity to maximise free cash flow generation," the company says.
And Devon Energy aims to boost annual pre-tax free cash flow by $1bn, partly by doubling down on efficiency savings — a strategy that has gained momentum from the recent tariff turmoil. "Given the challenging market and shifting competitive landscape, this is the right moment to focus internally and improve our profitability," chief executive Clay Gaspar says.
Oil services spell out initial cost of Trump’s tariffs
by Skip Peel - Mineral Consultant
yesterday
Oil services spell out initial cost of Trump’s tariffs
The world's top oil field service firms are starting to count the cost of US president Donald Trump's unprecedented trade wars, amid a challenging outlook caused by tariff-related volatility that has sent oil prices lower and sparked fears of a recession.
Halliburton forecasts a 2-3¢/share hit to second-quarter results, with its completion and production unit — which includes the hydraulic fracturing (fracking) business — accounting for 60pc of the expected fallout, and drilling and evaluation making up the rest. Baker Hughes says full-year profit could be reduced by $100mn-200mn, assuming that the tariff levels in effect under Trump's 90-day pause remain in place for the rest of the year.
While SLB, the world's biggest oil field contractor, says it is too early to fully assess the potential impact of tariffs, the company is taking proactive steps to shore up its supply chain and manufacturing network, as well as pursuing exemptions and engaging with customers to recover related cost increases.
Crude prices slumped to a four-year low earlier this month after Trump's tariffs threw global markets into a tailspin. The oil field service industry argues that it is better prepared for a downturn this time around, given a focus on capital discipline and returns in recent years. Yet the double blow of tariffs and an accelerated return of Opec+ barrels to the market could cause further headaches — even as firms move to mitigate the impact.
"We need a bit more clarity and stability in the structure of tariffs so that we can really understand what levers we can pull and then what the overall outcome is going to be," Halliburton's chief financial officer, Eric Carre, says. "There's just a lot of moving parts right now."
Global upstream spending will be "down by high-single digits" this year, Baker Hughes says. The company forecasts a low-double digit decline in North America spending by its clients, and a mid-to-high single-digit drop internationally.
"A sustained move lower in oil prices or worsening tariffs would introduce further downside risk to this outlook," chief executive Lorenzo Simonelli argues. "The prospects of an oversupplied oil market, rising tariffs, uncertainty in Mexico and activity weakness in Saudi Arabia are collectively constraining international upstream spending levels." While Baker Hughes' "strong weighting" to international markets and a diversified and local supply chain provide a cushion, the company is seeking to limit the tariff impact for its industrial and energy technology division by exploring domestic procurement alternatives and improving its global manufacturing footprint.
The Wright stuff
Liberty Energy, whose former chief executive Chris Wright was picked by Trump to serve as his energy secretary, expects modest tariff-related inflationary impacts on engines and other electric components, some of which are being offset by lower prices or volume discounts. "All said, we don't anticipate a significant direct impact from tariffs at the moment," chief financial officer Michael Stock says.
Shale producers are also starting to figure out how they may be affected, with Diamondback Energy reviewing its operating plan for the rest of the year. "Should low commodity prices persist or worsen, Diamondback has the flexibility to reduce activity to maximise free cash flow generation," the company says.
And Devon Energy aims to boost annual pre-tax free cash flow by $1bn, partly by doubling down on efficiency savings — a strategy that has gained momentum from the recent tariff turmoil. "Given the challenging market and shifting competitive landscape, this is the right moment to focus internally and improve our profitability," chief executive Clay Gaspar says.