Energy services giant Halliburton (NYSE: HAL) has issued a cautious outlook for the remainder of 2024, reporting a significant reduction in drilling demand across North America. In an earnings call last week, CEO Chris Wright attributed this downturn primarily to escalating trade tensions between the United States and China, coupled with the looming threat of potential tariffs on energy products. While Halliburton maintains a positive long-term view for global oil and gas activity, particularly in international markets like Southeast Asia and Latin America, the near-term prospects for its core North American operations are increasingly uncertain.
The company specifically highlighted a noticeable drop in demand for onshore drilling services, driven by reduced exploration and production activity. Halliburton’s rig count has already decreased substantially compared to the same period last year, with fewer projects being scheduled for completion. This slowdown is directly linked to cautious investment decisions by oil and gas companies, who are weighing the impact of rising operational costs against volatile commodity prices.
Furthermore, Halliburton echoed concerns raised by other industry players regarding potential tariffs on imported energy equipment – a key component of its supply chain. The ongoing trade dispute between the US and China has created considerable uncertainty surrounding international trade regulations, leading many companies to postpone investments and reassess their sourcing strategies. While direct tariff impacts haven’t yet materialized, the anticipation of such measures is contributing to a general reluctance within the industry.
The company’s report comes amidst broader anxieties about the global economic outlook and the potential for a recession. Many analysts believe that a weaker global economy would inevitably translate into reduced energy demand, further exacerbating challenges for oilfield service providers like Halliburton. Halliburton’s strategic focus is now shifting towards these international markets where they see more stable growth opportunities, while actively managing costs and adapting to the evolving North American landscape. They are investing in digital solutions and automation to improve operational efficiency and maintain profitability amidst declining demand.
