South America Out-Exports the U.S. as Hormuz Stays Shut

South America Out-Exports the U.S. as Hormuz Stays Shut South American crude shipments rose 155 million barrels in five months, outpacing the U.S., as buyers scramble for oil that bypasses the closed Strait of Hormuz. South America added more crude exports than the United States over the first five months of 2026. The region's oil exports jumped 155 million barrels between January and May from a year earlier, ahead of the 112 million barrels the US shipped over the same stretch, according to Kpler data reported by OilPrice on Thursday (2026-06-04).⁷ That matters because the extra barrels are landing into a hole the region cannot fill. About 675 million barrels of Middle East oil have failed to reach buyers so far this year, and combined with production shut-ins the world has lost more than 1 billion barrels of supply since the Iran war began, Kpler estimates.⁷ South America's gain offsets only a fraction of that.⁷ The pull comes from a single chokepoint. The US-Israeli war on Iran has effectively shut the Strait of Hormuz, the lane between Iran and Oman through which roughly a fifth of the world's daily oil and LNG passes, Reuters reported on 2026-05-18.⁶ EIA data put 2022 flows through the strait at 21 million barrels a day, about 21% of global petroleum liquids consumption.¹ Brazil has been the clearest winner. Its share of total Chinese crude imports rose from around 10% in January to about 18% in April even as China's overall import demand weakened, the data showed.⁷ Chinese refiners took 1.43 million barrels a day of Brazilian crude in April, the highest monthly reading on record, surpassing the previous peak set in February.⁷ Guyana is the other half of the story. In seven years it has built nearly 1 million barrels a day of production capacity, as the ExxonMobil-led consortium brings on fields in the offshore Stabroek block, where more than 11 billion barrels of oil equivalent have been found over the past decade.⁷ Rystad Energy expects Guyanese output to rise 12% this year to around 690,000 barrels a day, reaching some 1.2 million by 2030.³ Brazil's trajectory is larger in absolute terms. Rystad forecasts the country's crude production will climb 10% this year to above 3.7 million barrels a day.³ But the arithmetic is unforgiving. Morgan Stanley called the market a "race against time" if Hormuz stays closed into June, TT News reported on Tuesday (2026-05-19).⁵ The bank noted that a 3.8 million barrel-a-day rise in US exports and a 5.5 million barrel-a-day cut in Chinese imports had shielded the rest of the world from 9.3 million barrels a day of tightness.⁵ South American volumes are additive, but small against those numbers. The policy backdrop is fracturing too. The UAE quit OPEC on Tuesday (2026-05-19) after 60 years, a move expected to weaken the Saudi-led alliance that has long damped oil price volatility, the Guardian reported.² A looser cartel removes one of the few brakes on a market already short barrels. Venezuela completes the regional trio in name more than in output. Most of its existing fields with decent reserves sit below breakeven, and its flagship new projects are not bankable below $80 a barrel and will not start producing until at least the late 2030s, the Economist noted.⁴ For now it adds little to the scramble. The signals are split. The aggregate read leans modestly bearish, on the logic that South American and US supply growth eventually loosens balances.⁷ Against that, contrarian positioning on Brent crude front-month stays bullish, driven by the demand and supply gaps the new barrels cannot close.⁵ Both can be right on different horizons. Watch whether the Atlantic Basin can keep filling Asian demand at this pace. China's April record for Brazilian crude came as its total imports fell, so the share gain reflects substitution, not growth.⁷ If Hormuz reopens, the premium on Hormuz-free barrels compresses quickly. If it does not, the open question is how long Brazil and Guyana can keep setting records before their own export capacity, not geology, becomes the binding constraint.⁷