The oil landscape in Latin America is changing rapidly.
Brazil, Guyana, and Argentina are increasing their production, presenting both challenges and opportunities for exporters amid an uncertain market.
New players in the oil market
These three countries are emerging as key drivers of crude oil growth.
Together, they are expected to add 400,000 barrels per day (b/d) to global markets, primarily light and sweet crude, which is highly sought after by refineries, according to Argus.
Brazil: With the introduction of new Floating Production, Storage, and Offloading (FPSO) units, Brazil will add 220,000 b/d to its production. Fields like Buzios and Mero will produce high-value crude, especially in demand in Europe.
Guyana: The biggest surprise in the oil market in recent years. In 2023, it reached 615,000 b/d, and its production will increase further with the Yellowtail project, adding 250,000 b/d.
Argentina: The expansion of infrastructure at Puerto Rosales will allow the export of its light crude Medanito from the Vaca Muerta formation, enabling the use of Suezmax tankers for larger export volumes.
Challenges and opportunities in a volatile market
The biggest challenge for these producers is securing buyers in a market affected by geopolitical uncertainty. Some factors impacting commercialization include:
Sanctions on Russia: U.S. restrictions have increased demand for non-sanctioned crude, benefiting Brazil and Guyana.
Potential trade tariffs: If the U.S. imposes tariffs on Canada and Mexico, it could shift trade flows, forcing these nations to redirect exports.
Reduced risk in the Red Sea: If maritime transit improves, Middle Eastern oil could regain its share in Europe, increasing competition.
Key destinations for Latin American crude
In response, producers in Brazil, Guyana, and Argentina are looking for new opportunities in key markets:
United States: Refineries on the West Coast are already importing crude from Guyana and Argentina.
Europe: In 2023, two-thirds of Guyana’s exports went to Europe, while Brazil remains a key supplier for refineries in India and China.
Asia and Africa: India has started purchasing Argentine Medanito crude, while Nigeria’s Dangote refinery could be a new destination for Brazilian and Guyanese crude.
An expanding future
With evolving markets and an uncertain environment, these countries are well-positioned to take advantage of the growing demand for light and sweet crudes. The key will be market diversification and the ability to adapt to changes in geopolitics and international trade.
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