Andrey_Popov/Shutterstock Save for later Print Download Share The economic fallout from US tariffs looks set to dampen upstream activity this year as oil and gas producers pull back on spending amid deep market uncertainty and lower oil prices. Oil-field services firms say they have seen little change in customer spending for now but are bracing for a contraction in global upstream investment in the second half once the impact of tariffs starts to become clearer. Short-cycle US shale will likely bear the brunt of the pullback as operators rein in activity to conserve cash, while spending outside North America and offshore could also slow, albeit less sharply. Analysts at Barclays forecast that upstream investment in North America will fall 10%-15% this year, with spending in the rest of the world shrinking by about 5%, assuming oil prices remain at current levels and tariffs don't get any worse. SLB CEO Olivier Le Peuch said he expects customers to "take a more cautious approach to near-term activity and discretionary spending," with expenditures in the Mideast and Asia likely to prove more resilient than other regions. Others were less circumspect. Weatherford CEO Girish Saligram bluntly stated that if the uncertainty around tariffs is left unresolved, it "will very likely cause demand destruction in the short- to mid-term." The company has cut headcount by more than 1,000 employees since last year in anticipation of a slowdown this year. Clay Williams, CEO of equipment manufacturer NOV, said that while the second quarter "looks solid," he "expect[s] things to get tougher after that, perhaps much tougher," with factors like the US-China trade war and a potential global oil-supply surplus "almost certainly lead[ing] to lower oil-field activity."
