Halliburton faces earnings hit from tariffs and weak oilfield activity

In the United States, Halliburton has recently warned of a significant earnings impact for the second quarter of 2025, attributing this forecast to ongoing tariffs and a decline in oilfield activity across North America. As oil prices hovered below the critical mark of $64 per barrel, the company's shares experienced a sharp decline of approximately 6%. This reaction indicates that many producers are hesitant to engage in drilling operations profitably when oil prices fall below the $65 threshold, thus limiting demand for Halliburton’s equipment and services. As the first of the major oilfield service companies to release its earnings, Halliburton's report carries substantial significance for the industry. The company’s North America revenue fell to $2.2 billion, representing a 12% decrease from the same period last year, which illustrates the overall slump in the oil sector. During this period, Halliburton also recorded a considerable severance charge amounting to $107 million, which influenced its overall profit, landing at $204 million—or 24 cents per share—down from $606 million, or 68 cents per share, reported in the previous year. The situation is further complicated by international concerns, particularly in Mexico, where Halliburton has observed a 2% year-over-year easing in international revenue. This decline is mainly due to reduced activity in drilling and project management. The Mexican state-owned company Pemex is experiencing challenges, including a substantial accumulation of debt to oil service providers, thereby affecting its operational capacity. Observers suggest that while Mexico’s oil sector may have potential clients, an immediate recovery is unlikely. Furthermore, the economic landscape is shaped by the broader implications of tariffs enacted by the Trump administration, which has been proactive in using emergency authorities to facilitate fossil fuel production. Besides Halliburton, other companies like 3M have also reported financial results reflecting the strain caused by tariffs. In particular, 3M indicated a potential hit to its 2025 earnings forecast due to trade tensions with China, suggesting that these tariffs contribute to an uncertain business environment across various sectors. Overall, Halliburton’s dire predictions provide insight into the precarious position of the oil and industrial sectors amidst fluctuating oil prices and increasing trade uncertainties.