Americas oil producers gain from Iran war supply shift

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Americas oil gains from Iran shift

Highlights

North and South America oil output is projected to rise 10 per cent by December 2026, offsetting over 2 billion barrels of global supply losses from Iran-related disruptions.
Argentina's Vaca Muerta development helped total exports top $10 billion in September, with TotalEnergies, Chevron, and the U.S. Export-Import Bank announcing investments and financing exceeding $30 billion.
Shell committed over $20 billion to double LNG Canada’s capacity, while Wood Mackenzie forecasts U.S. shale output at 11.8 million barrels a day by December 2027, reshaping global pricing power.

Production growth and investment accelerate

As reported by Financial Times, the conflict in Iran is driving a sustained shift in oil and gas investment toward the Americas as importers look for supply that is seen as more secure than shipments moving through the Strait of Hormuz.

Rystad Energy says total output in North and South America is on course to rise 10 per cent in the two years ending December 2026. Countries from Canada to Brazil have set production records this year, while global markets have lost more than 2 billion barrels of crude because of attacks on oil infrastructure and tankers in Hormuz.

Argentina is among the main beneficiaries as development at the Vaca Muerta shale formation gathers pace. The country’s total exports topped $10 billion for the first time in September, according to data published on Monday by the national statistics agency, helped by rising oil production.

TotalEnergies says it will invest $10 billion in new offshore developments and in expanding existing onshore gas projects in Argentina. Chevron has raised production at El Trapial in Vaca Muerta from 5,000 to 40,000 barrels of oil equivalent a day and plans to invest $13.8 billion over the next ten years, while the U.S. Export-Import Bank announced $7 billion in financing last month to support Argentine energy and critical minerals development.

Venezuela is also attracting fresh capital after Washington moved to reopen the sector to international investors. Production is up about 10 per cent this year to roughly 1.2 million barrels a day, and companies including Adnoc, Shell, BP and Chevron have signed or backed investment plans.

Regional impact on trade and pricing power

Analysts say the supply response from the western hemisphere is reinforcing the Americas as a counterweight to the Middle East, even if it cannot fully replace lower-cost Gulf barrels. Higher output is helping moderate global prices and could reduce Opec’s future ability to steer the market.

Daniel Yergin, vice-chair of S&P Global, says the disruption is reshaping supply chains and encouraging even Gulf countries to diversify through investment in the Americas. Schreiner Parker of Rystad Energy says the rise in western hemisphere production is taking medium-term pricing discretion away from the Gulf Cooperation Council, especially Saudi Arabia.

Canada is emerging as another major destination for investors seeking lower geopolitical risk. A survey by ATB Cormark Capital Markets found that almost four out of five institutional investors are more likely to back Canadian energy companies because of constraints on Middle East crude and LNG exports.

Shell and partners announced an investment of more than $20 billion last month to double the capacity of LNG Canada in British Columbia, with the plant set to export as much as 28 million tonnes of LNG a year. In the U.S., Wood Mackenzie forecasts shale production will reach about 11.8 million barrels a day by December 2027, around 1 million barrels a day above the level expected before the war began.

In our earlier report on the WTO’s warning about lasting trade shifts from the Middle East conflict, we outlined how repeated disruptions are pushing companies to redesign supply chains and shipping routes beyond short-term wartime fixes. The WTO flagged a sharp contraction in Middle East trade and argued that diversification into alternative, more resilient (though costlier) routes and regional trade links could persist even after tensions ease.

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