How the Strait of Hormuz Crisis Is Reshaping Oil, Shipping and Latin America

The Strait of Hormuz crisis has changed the oil market from a question of surplus supply to one of security, reliability and logistics. Crude and refined-product flows through the waterway fell from about 18 million barrels per day before the conflict to 4.8 million b/d in July and roughly 2 million b/d during August, according to Kpler data cited by Reuters.

That shock has not simply removed barrels from the market. It has made Gulf supply harder and more expensive to move, encouraged Asian refiners to search for alternatives and increased the value of oil that can reach customers without passing through the chokepoint. Latin America’s Atlantic-basin exporters are positioned to benefit—but mainly as a near-term strategic alternative, not yet as proof of a permanent trade realignment.

Why the disruption raised both oil and shipping costs

A physical supply shortfall is only part of the problem. When vessels face attacks, unavailable insurance or prohibitive premiums, cargoes that technically exist may be commercially unavailable. The result is higher freight, longer routes, delays and fewer willing tankers, adding a logistics premium to the price of crude.

Market prices reflected that uncertainty. Brent settled at $88.52 a barrel on August 14 and later moved above $91 as investors weighed conflicting claims about whether the strait was open to shipping. The price response therefore reflected not only the value of the oil itself, but also the risk of obtaining, insuring and delivering it.

The temporary nature of the diplomatic reprieve has reinforced that risk. A June memorandum provided for safe passage arrangements for only 60 days, and the United States later reimposed its blockade after renewed attacks, according to a Congressional Research Service summary. As negotiations stalled, refiners and traders had more reason to seek alternative contracts and maintain additional inventory.

Why Brazil and Guyana are the clearest beneficiaries

Brazil and Guyana benefit from a favorable combination of geography and production growth. Their offshore barrels are in the Atlantic basin, so cargoes bound for Asia do not need to cross Hormuz. That does not make them a perfect substitute for every Gulf grade: crude quality, refinery compatibility, tanker availability and delivered cost still matter. But when Gulf deliveries become uncertain, reliable Atlantic supply becomes more valuable.

Their advantage is also backed by real incremental production rather than geography alone. The U.S. Energy Information Administration forecasts that Brazil, Guyana and Argentina together will add 0.4 million b/d in 2026, half of the expected 0.8 million b/d increase in global crude production. The International Energy Agency likewise identifies Brazil, Guyana and Argentina among the leading contributors to non-OPEC+ supply growth.

That gives Brazil and Guyana two possible sources of upside:

• Higher realized prices: A broader risk premium can increase the value of export cargoes.
• Greater access to Asian buyers: Refiners seeking non-Hormuz supply may be more willing to source from Atlantic-basin producers.
• More strategic relevance: New production becomes valuable not only as additional supply, but also as insurance against geopolitical disruption.

The crisis did not create Brazil’s pre-salt expansion or Guyana’s offshore growth. It made those existing trends more commercially and strategically important.

Argentina expands the regional supply response

Argentina is part of the same broader supply story through the growth of Vaca Muerta. The EIA expects Argentine production to rise from an average of 670,000 b/d in 2024 to 740,000 b/d in 2025, with Vaca Muerta accounting for an estimated 62% of output between January and October 2025.

Argentina is not as immediately export-flexible as Brazil or Guyana. Pipeline capacity, port infrastructure and domestic-market needs affect how quickly additional shale production can reach overseas buyers. Even so, rising output expands South America’s potential contribution to global supply and reduces the region’s dependence on imported barrels over time.

Venezuela’s opportunity is more conditional

Venezuela could benefit from higher prices and demand for non-Gulf heavy crude, but the available evidence does not support treating its opportunity as equal to Brazil’s or Guyana’s. Production recovery and export growth depend on operational reliability, infrastructure, investment, sanctions exposure, payment arrangements and shipping access.

That distinction matters. Brazil and Guyana are benefiting from active production growth and relatively straightforward Atlantic access. Venezuela may gain from favorable market conditions, but turning that advantage into durable export and fiscal gains requires constraints beyond the oil price to be resolved.

Exporters gain while importers absorb the shock

The regional effect is sharply uneven. Net oil exporters can see higher export receipts and stronger public revenues when prices rise. Fuel-importing countries face the opposite arithmetic: a larger import bill, pressure on subsidies, higher transport costs and weaker household purchasing power.

The IMF identified energy-import-dependent Central American economies and tourism-reliant Caribbean economies as especially vulnerable to elevated energy costs. Higher fuel prices can pass through electricity generation, road transport, food distribution, airline fares and cruise operations, making the shock broader than the crude market alone.

The region also has an important complication: being a crude exporter does not necessarily mean being insulated from refined-fuel inflation. Countries can export crude while importing gasoline, diesel or other refined products, leaving consumers exposed to global prices and shipping costs.

Why the damage can last after Hormuz reopens

A reopening could bring immediate relief to crude markets, but retail prices and wider supply chains may adjust more slowly. UN Trade and Development warned that food and transport systems take longer to recover because disrupted shipping networks need time to reset.

That lag is especially significant for small island economies that import both fuel and food. UNCTAD reported that Caribbean households continued to face higher fuel and electricity costs even after oil prices moved closer to pre-crisis levels. Lower benchmark prices do not instantly reverse freight contracts, inventories purchased at elevated prices, utility costs or accumulated fiscal pressure.

ECLAC also expects the 2026 average oil price to remain above the 2025 average, even under a scenario in which prices ease later in the year. The result is a two-speed regional economy: exporters may capture a windfall while importers continue absorbing higher costs.

Is the trade realignment permanent?

Probably not—at least not yet. A lasting shift of Asian demand toward Latin American oil would require several conditions to persist:

1. Hormuz insecurity would need to remain prolonged enough to change contracting and refinery behavior.
2. Brazil, Guyana and other Atlantic suppliers would need to deliver reliable production growth.
3. Their crude grades would need to fit the requirements of Asian refineries.
4. Tanker capacity, insurance and freight costs would need to make the route competitive.
5. Gulf supply would have to remain less dependable than its traditional cost and distance advantage.

If transit through Hormuz normalizes credibly, Gulf exporters can recover much of their position in Asian markets. Latin America’s underlying production growth would remain important, but the crisis-driven price premium and temporary market-share gains would likely diminish.

The more durable legacy may therefore be strategic rather than permanent. The disruption has shown refiners the value of geographic diversification and shown producers that reliable Atlantic barrels can command a premium when a major energy chokepoint becomes unsafe. For Brazil and Guyana, that is a meaningful short-term advantage. For Central America and the Caribbean, it is a reminder of how quickly a distant maritime crisis can become a domestic cost-of-living problem.