The global economy runs on fossil fuels, not renewable energy. The Iran war underscores the importance of oil in this regard. In the middle of February, two weeks before the war started, West Texas Intermediate oil, the United States’s benchmark, was trading at about $65 a barrel. On Monday, because of the Iran war and the closure of the Strait of Hormuz, WTI for May delivery is trading around $110 a barrel.
What is the longer-term outlook for global oil prices? The answer is clear. Over time, the price of WTI will drift lower. The global economy will be well supplied with oil, and hydrocarbons will continue to be the primary source of energy. The most exciting geographies for oil production are in South America, West Africa, and the Permian Basin of the U.S.
OIL AND GAS PRICES LIKELY TO STAY ELEVATED EVEN IF THERE IS A CEASEFIRE IN IRAN
Let’s start with Guyana on the northern coast of South America. This small, once-impoverished country is the most exciting oil geography in the world. Guyana produced zero oil as recently as 2019. By the end of this year, production should reach 1 million barrels a day, and by 2030, output should climb to 1.7 million barrels a day. Importantly, production costs in Guyana are low, in the region of $35 a barrel. With 11 billion barrels of proved reserves, Guyana is now an emerging petrostate.
Suriname borders Guyana. The country offers a similar geological profile with even greater upside potential. By 2028, daily production in Suriname should reach 200,000 barrels per day, and a few years later, production should exceed 1 million barrels per day.
Brazil, meanwhile, continues to build on its status as a deepwater powerhouse. Daily production rates exceed 4 million barrels a day, and reserves could exceed 30 billion barrels. Currently, oil production in the country is centered offshore in deep waters. But preliminary studies indicate that the Amazon basin holds billions of barrels of recoverable oil. It is clear that Brazil will remain an indispensable supplier of oil to global markets.
Across the Atlantic in southern Africa, Angola is staging a comeback. After years of declining production due to underinvestment, Angola’s government has shifted to pro-growth policies. Oil production is climbing again and should exceed 1 million barrels a day before the end of the year. Oil reserves are substantial, as high as 9 billion barrels. With infrastructure already in place, production costs are relatively low.
Finally, there is the Permian Basin, the crown jewel of American energy production. The Permian is defined by vast reserves, perhaps over 170 billion barrels, and flexibility. Operators can bring wells online quickly, adjust production in response to price, and leverage an extensive network of pipelines and export facilities. Technological innovation continues to drive down costs and increase recovery rates. For investors, the Permian offers highly predictable returns in an inherently volatile industry.
These five oil-producing regions illustrate that risk capital does not flow based on political narratives or aspirational climate targets. Capital is invested in resources that are abundant, economically viable, and supported by stable frameworks. Guyana and Suriname represent the future of frontier exploration. Angola and Brazil demonstrate the value of political reform. The Permian Basin underscores the strength of American energy leadership.
WHAT ARE THE MOST IMPORTANT ENERGY ASSETS IN THE IRAN WAR?
At a time when energy security has reemerged as a central concern, these geographies are not just attractive investment opportunities. They are the foundation of the next phase of global oil supply. Investors who recognize this shift early will profit from it. Three large American oil companies, Exxon Mobil, Chevron, and APA Corp, formerly Apache, are well best positioned to take advantage of the current environment of high prices and the continuing necessity to develop new oil reserves.
James Rogan is a former U.S. foreign service officer who later worked in law and finance for over 30 years. Today, he writes a daily note on markets, economics, politics, and social issues.Â