Why Trump’s Tariffs Hurt Drillers More Than Refiners

Core Insights - President Trump's tariff strategy has significantly impacted the oil and gas sector, with upstream, midstream, and refining companies facing higher costs for essential materials despite crude oil and fuel imports being exempt from tariffs [1][4]. Equipment Costs and Supply Chains - The oil and gas industry is experiencing cost inflation on equipment and materials due to tariffs, particularly on steel, which is crucial for various infrastructure components [2]. - Tariffs are expected to increase offshore project costs by 2–5%, leading to delays or renegotiations of capital plans by operators [3]. Impact of Chinese Tariffs - Chinese tariffs affect the supply chain for electrical gear, valves, sensors, and AI-enabled drilling controls, which can significantly impact the economics of drilling programs [4]. Crude Oil Imports - Crude oil and refined products are exempt from tariffs to protect refinery economics and avoid politically sensitive fuel price increases during election years [6].