The Western Hemisphere’s Near-Term Oil Production Growth to Come from South America (and Canada)

     The EIA has recently revised its U.S. oil production forecasts downward, predicting a decline in U.S. crude oil output from mid-2025 through 2026. This is despite the expected 2025 production growth in the Gulf of 100,000 Bbls per day from new deepwater fields. However, in other places in the Western Hemisphere, oil production is expected to grow more significantly.

     Walter Russel Mead suggests in the Wall Street Journal that the Trump administration’s idea of “unleashing energy dominance” is likely to be the energy dominance of the Americas as a whole rather than U.S. energy dominance. It appears we will be ceding some of our share of the whole of Western Hemisphere oil production to Canada, Brazil, Argentina, Guyana, plus Suriname. The latter two, along with much of Brazil’s prolific sub-salt plays, are offshore plays with great oil production. Argentina’s Vaca Muerte is easily as good as the Permian, and they are getting better at building infrastructure and will likely be exporting more and more oil and gas through the years. Currently, they are producing over 800,000 Bbls per day, surpassing Venezuela and Colombia. Currently, Chile is the major export destination, followed by the U.S.  Oil from Guyana and Suriname is virtually all exportable. Currently, Guyana is exporting 600,000 Bbls per day, with estimates of 1.7 million Bbls per day by 2030.  Early this year, Canada reached record levels of oil exports to the U.S., and although the tariff tiffs have soured the deal a bit, they can export more to the U.S. and other places. Mead notes that Brazil’s state-owned oil company, Petrobras, is hoping to achieve 1 billion Bbls per year (about 2.7 million Bbls per day) by 2030 to make Brazil the world’s fourth-largest oil producer. Brazil produces more than 3.5 million Bbls per day. Canada is also priming up to export more oil and LNG. Mead also notes that Latin America’s former energy powerhouses, Venezuela and Mexico, are not currently relevant. He writes:

“Oil and gas production in Venezuela and Mexico is inhibited by nationalistic instincts and corruption. If either country ever comes to its senses, hemispheric production would rise even further.”

     Mexico, which produces about 2 million Bbls per day, does have plans to increase its production and refinery capacity, but these will likely just adjust upward from previous drops in production. Another energy powerhouse, Colombia, has plans to increase oil investment and production, but that is likely to only offset declines in recent years. Irina Slav writes for Oilprice.com:

“Colombia has been struggling to reverse a decline in its oil production over the past five years and now has an ambition to boost its daily average to over 1 million barrels, from around 800,000 barrels in 2024.”

     She notes that more investment is required just to keep oil levels steady due to production declines and low recovery efficiency, requiring more EOR projects. She also notes leader Gustav Petro’s preference for wind and solar development over oil expansion. The U.S. buys about 83,000 Bbls per day from Colombia.  

     Due to transport distance and cost, it is cheaper to import and export oil within the Hemisphere. There are no chokepoints and dangerous zones, aside from the Panama Canal (and some guerrilla attacks on pipelines in Colombia), which can be bypassed most of the time. No Straits of Hormuz or Gulf of Aden. Intra-hemisphere oil and gas trade is smart. It is cheaper and less emissions-intensive. It not only protects us from conflict-driven supply disruption risks. It also shields all in the region from the geopolitical and economic risks from OPEC plus producers, essentially limiting their hemispheric influence. It will also likely slow the energy transition a bit, but I don’t think it will derail it, especially combined with the GOP bill to downsize incentives and IRA funds.

     According to the EIA, oil supply will exceed demand for OECD countries later this year for the first time since 2021, putting downward pressure on oil prices since OECD countries are the biggest oil consumers. OPEC plus is also increasing supply, which will lower global benchmark oil prices. It is, in part, an attempt to wrestle back some market share, but it likely won’t work in doing that to the Western Hemisphere since the U.S. can buy more intra-hemisphere oil instead.

  

  

 

 

References:

 

Short-Term Energy Outlook. Energy Information Administration. July 8, 2025. Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)  Full PDF: steo_full.pdf

A Fossil-Fuel Boom in the Americas. Walter Russel Mead. Wall Street Journal. July 7, 2025. A Fossil-Fuel Boom in the Americas - WSJ

Soaring Vaca Muerta output drives Argentina oil export revenues. Rystad Energy. February 12, 2025. LatAm Insights: Soaring Vaca Muerta output drives Argentina oil export revenues

Colombia Oil Investments Could Hit $4.68 Billion in 2025. Irina Slav. OilPrice.com. May 30, 2025. Colombia Oil Investments Could Hit $4.68 Billion in 2025 | OilPrice.com