Trump’s tariff threat hits Canadian oil and gas drills

The Canadian drilling sector and oil field services are already showing signs of slowing down due to the endangered tariffs of US President Donald Trump, which caused the fear that the expected recovery of the industry could stop if such levies go forward.

The level of employment in the Canadian drilling sector collapsed between 2014 and 2020. Due to permanent low oil prices and reduced production during the Coid-19 pandemic.

The activity has improved since 2020, but Trump’s threat to impose a 10 -pointed tariff on 4 million barrels per day (BPD) of Canadian raw oil imported to the United States, this could increase, the industry representatives said.

When volatility affects oil markets, petroleum services companies are often first affected because their customers of oil manufacturers seek to delay or delay consumption.

Precise drilling, the largest Canadian drilling operator, recorded a steep slowing than expected in his Canadian servicing segment in the fourth quarter of 2024.

“It seems that some tariff has slowed down the decision to decide on customers,” said CEO Kevin Neveu during the conference call last month.

The February TD Cowen report envisaged that Canadian oil manufacturers “would go wrong on the side of conservatism” for the uncertainty of tariffs.

The analysts at the bank reduced the forecast of the counting of the Canadian plant by 2025. By about 5 percent, to an average of 175 active devices compared to the previous projection of 185 plants.

TD Cowen also reduced its recommendation for two Canadian drilling supplies – precise drilling and flag energy services – from “buy” to “retaining”.

“I know that in an interview, the level of anxiety is certainly rising,” said Mark Scholz, president of the Canadian Energy Council (CAOEC) in an interview.

“Any type of investment reduction will have an immediate and very, very fast effect on our industry.”

Scholz emphasized that the slowdown has been small so far, including “just a handful” of equipment.

He attributed it to uncertainty within the wider Canadian oil industry of the temporal, duration and market influence of tariffs.

Although a 10 % tariff on Canadian oil is unlikely to immediately affect most of the plans of oil manufacturers, at least in the short term, fewer companies could be affected, Danea warned
Gregoris, Director General with Enverus Intelligence Research.

“Many budgets (oil companies) are quite set and discovered at the moment. They could guess the low class of their (forecast) range, but I cannot imagine huge changes in capital budgets, “he said.

However, there are other concerns among manufacturers, including the ability to retaliate by Canada, which would increase the prices of input and drilling equipment imported from the USA, said Gurpreet Lail, president of the Ensrva Industrial Group.

Sand, for example, is among the cases the Canadian government has identified on its list of the proposed counter-tourif.

Sand is largely used by the oil and gas industry in hydraulic breakage or fraction.

If the tariffs take effect, Lail said, it will probably mean loss of a job in a sector that has not yet recovered where it was a decade ago.

Last year, the total employment in the Canadian drilling sector was approximately half of what was in 2014.

The CAOC forecast November 2024 predicted that in 2025 she would see the highest level of employment in ten years, but Lail said it was now in doubt.

“We thought we finally saw the light at the end of the tunnel here, and people were coming back to work,” she said. “But this is not good news.”