No Major Impact from Tariff Decision, North Dakota Says

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land Texas)

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Summary

While cost obligations are diverse, crude oil prices more than tariffs should determine the growth trajectory for North Dakota's production. Production is already curtailed in the Bakken shale.

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Tariff Relief Not Much for Bakken

The decision to strike down some of U.S. President Donald Trump's tariff agenda shouldn't have much of an impact on the oil and gas sector in North Dakota, a state regulator said.

The U.S. Supreme Court on Friday ruled 6-3 against Trump's reliance on the International Emergency Economic Powers Act (IEEPA) of 1977 to issue so-called reciprocal tariffs on nearly every country in the world last year.

Court justices, including some Trump appointees, said they were concerned about the separation of powers, noting it was Congress, not the president, that controlled the purse.

"The Framers did not vest any part of the taxing power in the Executive Branch," justices ruled in the majority opinion, referring to the authors of the U.S. Constitution.

Trump relied on the IEEPA to claim an emergency related to illicit drug flows and a "persistent" trade deficit, though the United States has carried a trade deficit for decades. The impact of the Supreme Court's decision could be broad, upending trade deals brokered under IEEPA pressure to open doors to foreign-sourced aluminum and steel.

Nathan Anderson, the director of the North Dakota Department of Mineral Resources, said he wasn't expecting much of an impact from tariff relief. Steel, he said, is a large component of project development, but capital is spread across various other sectors.

"It could raise output, but I think you need a little more increase in oil prices to really impact that," he said of the production impact.

One of the larger projects in North Dakota is linked to the natural gas sector as the state looks to capitalize on volumes associated with crude oil production. Though a marginal gas producer, Bakken output is expected to increase by 3% from year-ago levels.

MBU Resources is behind the 225-mile Bakken East pipeline, which could be in service by 2028. Subscribers to Industrial Info's Global Market Intelligence (GMI) Pipelines Project Database can learn more by viewing the related project reports.

Production on the Decline

For crude oil, state data to December, the last full month for which data are available, show production declined month-on-month by 76,000 barrels per day (BBL/d) to average 1.12 million BBL/d.

To January, state regulators said they estimated a drop of another 80,000 BBL/d or so because of severe winter weather. Anderson said that would almost certainly show up in next month's data release.

Multiple energy pipelines issued winter weather alert notices related to severe winter weather in January. Few breakdowns were reported, though frozen wells likely led to some production declines.

For the year, federal estimates point to 1.19 million BBL/d on average from the Bakken formation in North Dakota.

Apart from sanctions, there could be some optimism surrounding the market due to the geopolitical risk premium stemming from U.S. military pressure on Iran, one of the leading global crude oil producers.

Anderson in North Dakota said that risk adds another $5 or so to the per-barrel price of crude oil. West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, was trading at around $66.51 per barrel early Tuesday. The federal government expects an average of $53.42 per barrel this year.

That's limiting the profitability of many shale operators. Anderson added that the geopolitical risk premium from U.S. military operations in Venezuela last month had already faded and there could be a market glut approaching that would erase any risk from Iran over the long term.

"Most operators have a flat production plan for 2026 in North Dakota," he said.

By the Numbers

• 2026 should see production flat for North Dakota
• $5-per-barrel risk premium from Iran
• 76,000 BBL/d decline in crude oil production to December

Key Takeaways

• Oil prices more than tariffs impact North Dakota energy.
• Production is on the decline.
• Winter weather had an impact.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).