Oil price shocks since the U.S. and Israel first struck Iran, the world’s fifth-largest oil producer, have global markets on edge. The sudden energy crisis, which emerged after Iran closed the Strait of Hormuz, preventing the passage of around a fifth of the world’s oil supply, emphasizes the importance of petroleum production in non-OPEC countries. Brazil, along with Guyana and Argentina, was named among the largest non-OPEC contributors to global oil supply growth. Steadily expanding petroleum production will assist with securing energy security in the Americas.
Brazil’s oil production over the last decade has skyrocketed. For February 2026, it hit a record high of just under 4.1 million barrels per day. This is a notable 16.4% increase over the same period a year earlier and 1.7 times greater than February 2016, when Brazil lifted an average of just over 2.3 million barrels of oil per day. Unsurprisingly, the country's prolific pre-salt oilfields are responsible for the lion’s share of that production, accounting for nearly 76% of petroleum output.
Economically vital natural gas production is also growing at a steady clip. During February 2026, Brazil pumped nearly 7 million cubic feet of natural gas per day, which represents a stunning 24.5% increase year on year and is 2.2 times greater than a decade earlier. While all attention is on oil prices, with Brent up by a whopping 73% since the start of 2026, it is the outlook for global natural gas supply that is creating considerable fear.
Iran knocked out 17% of Qatar’s liquified natural gas (LNG) export capacity last month. Qatar is responsible for around a fifth of the world's natural gas supply. There are fears that the damage caused by Tehran’s drone strikes will take years to repair. This sparked considerable concern in Asia and Europe, which are reliant on Qatar’s LNG shipments. Some members of the European Union (EU) are considering fuel rationing. Germany’s Chancellor Friedrich Merz warned that the shock will be as severe as the COVID pandemic and Russia’s invasion of Ukraine.
Despite Brazil being South America’s second-largest natural gas producer, behind neighboring Argentina, the country is still a net importer of the economically crucial fossil fuel. This makes Latin America’s largest economy more prone to disruption from soaring natural gas prices caused by the Middle East conflict than other regional economies. This underscores the importance of Brazil’s growing natural gas output, particularly in a region where some countries are experiencing shortages and supply from Trinidad and Tobago, a major producer, is in decline.
In response to the uncertainty created by the war against Iran and heightened tensions over the Strait of Hormuz, which hit global energy supplies, Brasilia introduced a 12% levy on oil exports. This is not only designed to boost government revenue but also to incentivize oil producers to sell their production domestically to ensure the domestic fuel supply is uninterrupted while reducing the impact of global price swings. Indeed, the oil price spike is impacting Brazil’s all-important agricultural sector with a record soybean crop at risk.
A significant portion of production growth will come from national oil company Petrobras. The state-controlled company, which is 37% controlled by Brasilia, will invest $69.2 billion between 2026 and 2030, with 62% or $43 billion directed to pre-salt operations, while 24% will go to post-salt assets and 7% on exploration activities. Petrobras anticipates it will be lifting 2.6 million barrels per day by 2030, with total commercial oil and natural gas output hitting 2.9 million barrels of oil equivalent daily.
Energy investment, including from the private sector and foreign oil companies, continues to grow. According to S&P Global, Brazil’s favorable regulatory framework and transparent oil auctions are attracting sustained investment. Leading industry body Brazil’s Institute of Oil, Gas and Biofuels (IBP) anticipates a record $21.3 billion of upstream investment during 2026. Global supermajors Equinor and Shell are also spending significantly on expanding operations in Brazil. This will go a long way to boosting oil production, with Brasilia eyeing Middle East instability as a means of boosting petroleum exports.
Rising investment in Brazil’s hydrocarbon sector will drive solid production growth. Analysts anticipate that Latin America’s largest country will be lifting as much as 5.3 million barrels of crude oil per day by 2030. This represents an ambitious 40.6% increase over 2025 and will see Brazil overtake Canada to become the world's fourth-largest oil producer behind Saudi Arabia. That solid production growth will drive a sharp uptick in oil exports, which will improve energy security for the Americas and give Latin America’s largest economy a healthy lift.
Brazil exports more than half of the oil produced, making it an important contributor to global petroleum supply. Last year, Brazil exported a record 1.92 million barrels per day, earning nearly $45 billion. Around 45% of those shipments were purchased by China, with around 10% going to the U.S., which at 231,000 barrels per day is equivalent to 3% of all petroleum imported for 2025. There is speculation the U.S. will import more oil from Brazil, especially for heavier grades of crude oil, because of supply disruptions caused by Iran's closing of the Strait of Hormuz.
Brazil’s oil exports are expected to expand significantly during 2026, by as much as 10%, perhaps more now that Middle East petroleum supplies are severely disrupted. Greater demand is expected from China because the world’s second-largest economy, by nominal GDP, obtains around 42% of its petroleum imports from the Middle East. In addition to this, Washington’s intervention in Venezuela, which secured Guyana’s once-in-a-lifetime oil boom, has disrupted around 2% of Beijing’s oil supply.
During 2025, around 45% of the petroleum exported from Brazil was exported to China. Prior to the massive disruptions to global oil supply caused by U.S. and Israeli strikes on Iran, which saw Tehran close the Strait of Hormuz, that number was expected to climb to at least 50% of all oil exported by Brazil. There are signs exports to China will rise further than forecast because of the current disruptions to global supply and the drop in petroleum imports from Venezuela.
There is speculation that, because of major supply disruptions, the U.S. will import higher quantities of Brazil’s crude oil during 2026, despite some analysts claiming such shipments are in decline. Demand for Brazil’s light and medium-low sulfur grades, which are especially suitable for U.S. refineries, remains strong. Indeed, U.S. Energy Information Administration (EIA) data shows January 2026 petroleum imports jumped a notable 23.6% month over month to 236,000 barrels per day and by 23% compared to a year earlier. Growing production of medium-sweet crude oil from Brazil’s prolific offshore pre-salt fields will boost energy security in the Americas.
By Matthew Smith for Oilprice.com
