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It will take many months for Middle East gas and oil volumes to fully recover from the U.S./Israel-Iran conflict, even if all hostilities stop today. In the case of some key sites, such as Qatar’s North Field gas site — a primary cog in the global liquefied natural gas (LNG) machine — recovery will take several years. In the case of gas, according to a recent comment from the General Secretary of the Gas Exporting Countries Forum (GECF), Philip Mshelbila, the Iran war has “triggered a massive spike in price, returning the market to volatility seen in 2022,” following Russia's invasion of Ukraine. That reshaped supply and demand dynamics, he said, with the gas market expected prior to the war to swing into oversupply this year. However, he concluded, it is now not clear whether the U.S./Israel-Iran conflict will delay that oversupply or whether it will simply never come. Meanwhile, given the damage to oil fields and pipelines across multiple countries, shutdowns, disturbances to shipping, and loss of workers on site due to closures and evacuations, oil producers in the Middle East may take six months to a year to fully restore output once the war ends, according to industry analysts. Of course, in the zero-sum game of global energy, there is a winner for every loser created, with the U.S. having positioned itself as a primary beneficiary of oil and LNG shipments to compensate for any global shortfall. But Washington is also looking to use this opportunity to enhance the allegiance of oil and gas-producing countries in its self-proclaimed South American sphere of influence by extending such opportunities to them.

Top of this list is Venezuela, understandably enough, given Washington’s seamless replacement of longstanding President Nicolás Maduro on 3 January with acting president (and Petroleum Minister and OPEC representative) Delcy Rodriguez. Since then, moves have been underway to energise a rapid, U.S.-directed revival that can turn the country from a stranded petro-state sitting atop the world’s largest proven oil reserves but producing barely a sliver of its potential into a global oil and gas giant that is a major geopolitical and energy asset for Washington. Despite the deleterious effects of increased state control under former President Hugo Chávez and the successive administration of Maduro, Venezuela still holds roughly 303 billion barrels of crude oil, or about 17% of the global total. Most of this is extra-heavy crude oil from the Orinoco Belt that requires more technical expertise to handle than lighter grades but is cheaper to lift and often more profitable to process. The challenge lies in transporting, upgrading, and refining it, not extracting it, with the real constraints being collapsed infrastructure, a chronic shortage of diluent, broken upgraders, sanctions, and the hollowing out of Petróleos de Venezuela, S.A. (PDVSA). If those bottlenecks were addressed, the country could quite quickly return to producing the roughly 3 million barrels per day (bpd) of crude oil it did as recently as 2008.

As it stands, U.S. supergiant Chevron has consolidated its position in the country’s oil sector through an asset swap that increased its stake to 49% in the Petroindependencia venture, which operates the Carabobo 3 project in the Orinoco Heavy Oil Belt. It has also gained rights to develop the Ayacucho 8 area in the same Belt, and the firm aims to increase its current production in the country of 260,000 bpd by 50% within the coming 18 to 24 months. At the same time, several European firms have recently regained control of key assets under new production-sharing frameworks. Spain’s Repsol, for example, now targets a tripling of its oil production across the country within three years, while Great Britain’s Shell is expected shortly to go ahead with a deal to develop the Loran gas field as a single project with the Manatee field in Trinidad, providing a fast route to export gas. Meanwhile, Italian major ENI continues to produce natural gas through the Cardón IV joint venture with Repsol in the offshore Perla field, which supplies around 30% of Venezuela’s gas demand. The U.S. revoked ENI’s ability to be repaid in oil for the gas it produces, but the firm is currently negotiating a new payment mechanism that complies with sanctions.

There will be no shortage of heavyweight buyers either for whatever it can export, with India already having stated its willingness to evaluate purchases from Venezuela as an additional option to further increasing its oil buys from the U.S. There is positive history here already, as before U.S. sanctions were increased on Venezuela under Maduro, India imported about 300,000 bpd of Venezuelan-origin crude oil in 2019. Reliance Industries was a major Indian buyer then, and recently, Indian Oil Corporation highlighted its readiness to take Venezuelan crude, adding that it is among the few refiners in the country able to process the heavy, high-sulphur oil within its system. Tying in India as a major end-buyer of oil in countries that it is targeting for geopolitical reasons was also a hallmark of U.S. foreign policy in the Middle East for years, including in the first presidency of Donald Trump, as analysed in full in my latest book on the new global oil market order. Aside from acting as the key mediator for the Arab states involved in order to increase Washington’s influence over them, the U.S. was also able to use these types of deals to encourage India to increasingly act as the political, economic, and military counterweight to China across the Asia-Pacific region.

Trump’s confessed “favourite president” — Argentina’s Javier Milei — is also set to see his country benefit from continued investment by U.S. firms in its oil and gas sector on the same basis as Washington is working with Venezuela. In October 2025, the U.S. Treasury provided a US$20 billion lifeline to Argentina, which included currency swaps and direct purchases of Argentine bonds, which were explicitly intended to support Milei’s pro-market reforms and stabilise the economy for foreign investment. This was followed on 4 February this year by the ‘Reciprocal Trade and Investment Agreement’, which fast-tracks U.S. investment in strategic sectors, including energy and critical minerals. Given this, several American companies are ramping up oil and gas investment activity, particularly in the Vaca Muerta shale formation, which is now being referred to as another Permian Basin due to its scale. Continental Resources recently purchased non-operating interests in four blocks in the Vaca Muerta basin to accelerate expansion, while Chevron is leaning toward making Vaca Muerta a core asset in its global portfolio. Meanwhile, Baker Hughes secured a major order in early 2026 to supply gas compression units for the San Matias Pipeline, supporting gas transport from Vaca Muerta. Overall, Argentina is on track to reach 1 million bpd of oil this year, up 26% from 2025.

It is safe to say that Brazilian President Luiz Inácio Lula da Silva does not occupy the same elevated position in Trump’s Christmas card list as his Argentine counterpart, but Washington cannot get away from the country’s strategic importance as part of one of the original ‘BRIC’ (Brazil, Russia, India, China) emerging-market powerhouses, or its rapidly increasing oil production, allied to its geographical position in the U.S.’s ‘backyard’. As of now, Brazil is producing a record-breaking 4 million bpd and over of crude oil, and including natural gas, total hydrocarbon output hit a new record of 5.3 million barrels of oil equivalent per day (boe/d) recently. Industry forecasts are that it may well become one of the world’s top five oil producers by 2030, supported by extensive investment plans from Petrobras and foreign oil companies. These include supermajors from the U.S., focusing now on high-impact exploration and deepwater production rather than the maturing fields. Last October, for example, ExxonMobil achieved its first-ever upstream production in Brazil at the Bacalhau field, which has a capacity of 220,000 bpd. Chevron was awarded new offshore blocks alongside Petrobras and ExxonMobil last June, and Baker Hughes and Halliburton supply equipment and engineering for Petrobras’s US$109 billion five-year investment plan.

In the end, the slow restoration of Middle Eastern output is only half the story. The other half is the speed and scale with which Washington is repositioning South America as its next great energy pillar — from Venezuela’s revived heavy?oil engine to Argentina’s shale surge and Brazil’s deepwater ascent. As the Gulf rebuilds, these U.S.-aligned producers are not just filling a temporary gap but reshaping the long?term balance of global supply. The map is being redrawn, and the centre of gravity is already tilting westward.

By Simon Watkins for Oilprice.com