A new industry analysis has warned that recently announced tariff measures are likely to raise costs and delay several oil and gas projects worldwide in 2026, adding further strain to an already volatile energy market.
According to a report cited by Reuters, tariffs on key industrial materials such as steel, aluminum, copper, and crude feedstocks are expected to push project costs higher by 4 to 40 per cent, depending on the material and project scale. The study suggests that these tariffs, particularly those introduced under revised U.S. trade policies, could slow down investment decisions and delay multiple ongoing and upcoming projects.
The report estimates that more than USD 50 billion worth of new offshore oil and gas projects may be postponed or deferred beyond 2026 as companies reassess budgets, procurement strategies, and financial viability under the higher cost regime.
The global oil and gas industry relies heavily on intricate international supply chains for specialized equipment, rigs, and engineering materials. The new tariffs are likely to disrupt these networks, leading to higher import costs and longer lead times. This could impact not only project economics but also construction schedules for exploration and production facilities.
Experts noted that uncertainty over trade policies and tariff structures is prompting energy firms to delay Final Investment Decisions (FIDs), especially for capital-intensive offshore and deep-water projects. Some companies are also reviewing sourcing patterns and contract terms to mitigate risks arising from potential cost escalations.
To cushion the impact, energy companies are reportedly renegotiating supplier contracts, exploring domestic manufacturing options, and diversifying procurement channels. Others are considering force majeure clauses or shifting to low-tariff regions for certain supply components.
Analysts also predict a ripple effect on global energy demand and pricing, as project delays could reduce the expected supply pipeline in 2026. The slowdown may especially affect North American and Asian markets where refining and upstream investments are most exposed to tariff-linked materials.
Industry observers believe the tariffs could make U.S. and allied producers less competitive compared to oil and gas operators in the Middle East and Africa, where trade barriers are relatively low and material costs remain stable. Rising construction and material expenses could further challenge margins for firms already navigating energy transition pressures and market uncertainty.
Despite the headwinds, some experts suggest that part of the impact could be offset by declining costs in other areas, such as logistics and labor efficiency, but warn that the overall effect on 2026 project timelines will likely be negative.
The report concludes that unless tariff-related uncertainties ease, investment momentum in global oil and gas development may slow considerably next year, potentially reshaping near-term production and supply dynamics across key regions.
Experts noted that uncertainty over trade policies and tariff structures is prompting energy firms to delay Final Investment Decisions (FIDs), especially for capital-intensive offshore and deep-water projects. Some companies are also reviewing sourcing patterns and contract terms to mitigate risks arising from potential cost escalations.
To cushion the impact, energy companies are reportedly renegotiating supplier contracts, exploring domestic manufacturing options, and diversifying procurement channels. Others are considering force majeure clauses or shifting to low-tariff regions for certain supply components.
Analysts also predict a ripple effect on global energy demand and pricing, as project delays could reduce the expected supply pipeline in 2026. The slowdown may especially affect North American and Asian markets where refining and upstream investments are most exposed to tariff-linked materials.
Industry observers believe the tariffs could make U.S. and allied producers less competitive compared to oil and gas operators in the Middle East and Africa, where trade barriers are relatively low and material costs remain stable. Rising construction and material expenses could further challenge margins for firms already navigating energy transition pressures and market uncertainty.
Despite the headwinds, some experts suggest that part of the impact could be offset by declining costs in other areas, such as logistics and labor efficiency, but warn that the overall effect on 2026 project timelines will likely be negative.
The report concludes that unless tariff-related uncertainties ease, investment momentum in global oil and gas development may slow considerably next year, potentially reshaping near-term production and supply dynamics across key regions.
Resources – Reuters, Financial Times, Houston Chronicle
