South America can unlock 2.1M bpd of oil output if prices top $100

A sustained $100-per-barrel oil price could trigger a significant increase in South American crude supply, potentially unlocking up to 2.1 million barrels per day (bpd) of additional output by the mid-2030s, according to a Rystad Energy analysis.

The effective closure of the Strait of Hormuz has necessitated a significant upward adjustment in Rystad’s average forecasted 2026 oil price, which has jumped from $60 Brent per barrel in January to $89 per barrel on Tuesday. 

The finding underscores the essential contribution of hydrocarbons to public finance across South America, from Brasilia to Caracas. At current production levels, this price increase is projected to boost government revenues in the region by approximately $43 billion this year, compared to our initial base case, the analysis showed. 

Brazil’s Petrobras is positioned to be the primary beneficiary in the region, with its revenues expected to climb by $13.1 billion under the current $89 per barrel forecast, relative to the January baseline of $60 per barrel, Rystad Energy said.

“The Middle East conflict has done more than spike oil prices — it has exposed how dangerously concentrated global supply chains are around the Strait of Hormuz. South America is now positioned as the world’s most consequential source of incremental supply,” Radhika Bansal, senior vice president, oil & gas research, Rystad Energy, said. 

Offshore hubs lead immediate supply growth

Offshore developments in Brazil, Guyana, and Suriname offer immediate upside, potentially adding over 1 million barrels of oil equivalent per day (boepd) of production in the next decade, supported by about $33 billion in greenfield capex through 2035, the analysis stated.

ExxonMobil's Yellowtail project in Guyana, which started with an average production of 250,000 bpd, is targeting up to 300,000 bpd. Rystad suggests that similar debottlenecking efforts could add another 80,000 to 90,000 bpd across the Hammerhead, Jaguar, and Errea Wittu fields. 

However, Rystad maintains that the greatest potential for increased production lies in bringing forward the final investment decisions (FIDs) for new projects, rather than expanding existing assets.

“Nevertheless, limited shipyard capacity for new floating production, storage and offloading vessels (FPSOs) remains the binding constraint,” the Norway-based energy intelligence agency said. 

Venezuela's conditional production upside

Venezuela is once again a topic in the global supply discussion outside of the three main hubs. This follows the January arrest of President Nicolás Maduro and a reduction in the available supply of medium-to-heavy sour crude from the Middle East.

If the oil price hits $100 per barrel again, Rystad Energy forecasts that Venezuela could boost its oil production by 910,000 bpd by 2035. 

Significantly, 57% of this increase is expected to originate from existing fields in the East and West provinces, where the operating costs for medium crude are notably low, at just $7 to $8 per barrel.

Despite its CEO calling Venezuela "uninvestable" in January, ExxonMobil has sent teams to explore opportunities. Shell also signed preliminary agreements with Venezuela's PDVSA in early March for offshore gas and onshore exploration. 

All plans depend on sanctions relief and fiscal reform.

Investor confidence, boosted by the involvement of major companies like Chevron, Eni, Repsol, and Shell, could lead to a significantly higher upside if more players join them. 

Additional production potential would be further unlocked through increased participation in underdeveloped fields, especially through partnerships with PDVSA.

Argentina's biggest growth story

Vaca Muerta is Argentina's biggest growth story. Crude production is projected to rise from 600,000 bpd to 1 million bpd by 2030 and 1.5 million bpd by 2035 (standard price strip). A high case of 1.8 million bpd would make the VMOS pipeline the limiting factor, Rystad said.

Consistent crude shipments to China are anticipated to begin in 2027, positioning it to become the main export market.

“The pace of growth across South America will depend less on resource availability or economics and more on execution capacity, supply-chain constraints, and the broader investment environment,” Bansal said. 

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