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The oil boom in the Americas will last longer than the Iran conflict

Oil producers in the Americas, from Canada to Argentina have enjoyed a windfall by capturing market shares lost by Middle Eastern exporters during the Iran War. This renewed focus on global energy security could transform this crisis response into a long-lasting structural change.

Since the Iran War and the closing of the Strait of Hormuz six months ago, which affected?roughly one fifth of global oil supply?, the production of oil in the Americas is now a viable option to the Middle East. This is a 'one of the most dramatic changes to the global energy scene in decades.

The closure of Hormuz?immediately triggered?a scramble?to replace lost Middle Eastern barrels. America emerged as the main beneficiary.

According to Kpler, crude exports in the region, which stretches from Canada to Argentina, are at a record high of 11,7 million barrels a day (bpd). This is up from 10,3 million bpd a year ago and almost double what they were a decade earlier.

Brazil is second with 2.5 million bpd, while the U.S. exports average 4.4 million bpd.

Asia has taken in most of the extra crude oil from the Americas. Imports from the Western Hemisphere into the continent have risen since the Iran War began. They are expected to reach a new record of 5.4 million barrels per day in August. This compares with an average 4 million barrels per day in 2025.

The diversification of the economy was not planned, but rather a result of necessity. The shock has revealed the dangers of an over-dependence on Middle Eastern supply. The lesson of Asia's past wars may last a long time.

Even if Gulf Exports recover eventually, Asian?importers may want to avoid becoming overly reliant on any one region. This is especially true for a region with high conflict risk and vulnerable maritime chokepoints.

It is more costly to source more crude from the Western Hemisphere because Gulf crude has a geographical advantage. This cost is often viewed as a premium for avoiding future geopolitical turmoil.

AMERICAS ASCENTANT

The remarkable increase in oil and natural gas production in the Americas during the last decade has made this shift possible.

The U.S. Shale Revolution, which transformed the global oil market and made the U.S. world's biggest producer in 2018, surpassing Saudi Arabian and Russian production, was the primary driver of the expansion. U.S. oil production is expected to reach an all-time record of 21 million barrels per day (bpd) in 2025. This will account for about one fifth of global output.

Other countries have also seen a significant increase in production.

According to the IEA Brazil will reach a record 4.3m bpd by 2026. This is an increase of 480,000 bpd over last year.

Canada, meanwhile, continues to increase its oil-sands production capacity. Guyana has become one of the fastest growing producers in the world, while Argentina continues to increase output from its Vaca Muerta shale, which is one of the biggest unconventional resources outside North America.

In 2027, the combined North American and Latin American oil production will average 30.5 millions bpd, while Latin American oil output is projected at 9.3 million. According to IEA figures, this would be a 50% increase for the region in the last decade.

North America has spent many years developing production capacities, export terminals and pipelines. The Middle East oil crisis couldn't have happened at a more opportune time for its producers.

The MATCH IS MADE IN HORMUZ

Hormuz has provided a unique opportunity for these suppliers.

Asia is largely responsible for this shift. The Americas account for 30% of the global seaborne crude oil exports. The Americas won't replace Middle Eastern suppliers entirely in Asia. But they could continue to erode Gulf's market share.

Since decades, Asia has imported Middle Eastern oil because of its proximity.

Tankers sailing from Brazil or Japan could spend up to 60 days at the sea, which is about three times as long as the Gulf transit time. These longer journeys tie up fleets and increase freight demand and shipping cost.

Tanker rates have risen as crude oil has taken the long way to Asia. According to LSEG, rates for a VLCC carrying 2,000,000 barrels reached a record of $640,000 per day. This is more than triple the pre-war level.

Asian refiners are willing to accept higher transport costs for increased energy security. In a volatile world, reliability may matter just as much as the distance.

Few producing regions can compete with the Americas in terms of a variety of crude grades.

You can find them. These barrels are available. You can get them. These are becoming more abundant.

The Americas can't replace the Middle East because it has much larger reserves and lower production costs.

What began as a temporary reaction to the Iran War is now looking more like a permanent realignment in global oil trade, one that may last long after missiles have stopped flying over the Gulf.

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(source: Reuters)