Growth in North American oil production is likely to slow down and OPEC+ spare capacity thin out in 2026, meaning there could be fewer areas for additional barrels across the globe. South America stands out, however. Supply is forecast to keep rising, with ongoing Brazilian and Guyanese offshore developments driving this trend, and with a smaller contribution from Argentine shale.
Elsewhere in the region, output is likely to decline as social and environmental disagreements, capital shortages and natural field decline weigh on production. In Venezuela, sanctions, chronic underinvestment and collapsing infrastructure will lead to further declines.
The annual upstream investment in the region could surpass $50b/yr throughout the decade after reaching $46 billion in 2025. In 2026, most new greenfield investments will be concentrated in Brazil and Guyana, whereas Argentina, Brazil and Colombia will focus on improving existing fields and advancing mature site optimisation. Argentina stands out as a new investment centre thanks to President Javier Milei’s Large Investment Incentives Regime and the rollback of interventionist policies.
The key challenges facing South American oil producers in 2026 include a mix of economic, political and environmental issues. Lower forecast oil prices in 2026 are expected to impact project economics, especially for higher-cost unconventional and deepwater plays. Political pressures include stricter regulatory compliance requirements. Environmental issues comprise mounting demands for decarbonisation, biodiversity risk mitigation, community engagement and water management. There are also some infrastructure challenges. In Brazil, reinjecting gas supports oil recovery on offshore platforms, but inadequate infrastructure limits full gas monetisation. Argentina faces potential logistics slowdowns in Vaca Muerta if crude production grows faster than pipeline and port expansions.
Brazil: The anchor of regional growth
Brazil is projected to be the top contributor to South American supply growth in 2026, with production forecast to rise by 150,000b/d to 200,000b/d year-on-year, according to different analysts. State oil company Petrobras anticipates its oil and gas production to be 3m boe/d in 2026, up from 2.8m boe/d in 2025. Next year will be defined by sustained deepwater expansion in the east and policy-driven stagnation elsewhere.
Around 77% of Brazil’s production will come from pre-salt projects, the same as in 2025. Petrobras’ medium‑term platform schedule and subsequent updates show that, after Alexandre de Gusmao and P‑78 in 2025, the next Petrobras startup is FPSO P‑79 in Buzios, scheduled to begin operating in August 2026 with around 180,000b/d of oil processing capacity, although Petrobras is delaying its drillship contracts to gain additional knowledge of the reservoir.
Non‑Petrobras FPSO capacity, notably the large Bacalhau FPSO operated by Norway’s Equinor, started production in late 2025 and is due for a phased ramp‑up through 2026 rather than a new 2026 startup. Meanwhile, the start of the Pioneiro de Sepia II FPSO (also named FPSO P-85) has been delayed to 2029. More than 50% of Brazil's national gas production is reinjected to boost oil output, limiting the commercial use of this gas. Expanding the existing pipeline infrastructure, especially towards interior and central regions, could solve the problem, which the government says is being prioritised.
Guyana: The new frontier matures
While Brazil anchors growth, Guyana’s rapid expansion adds diversification to the regional outlook. Its absolute production volumes will remain smaller than Brazil’s, but it has become a reliable source of light sweet crude oil production in the wake of continued transportation fuel demand and blending requirements for heavier grades.
Guyana’s output is expected to reach 950,000b/d at the end of 2026, according to the US Energy Information Administration. This compares to 890,000b/d in November 2025. The Yellowtail project, officially named the ONE GUYANA FPSO, started producing in 2025 and will continue ramping up output in 2026 to its design capacity of 250,000b/d. It is part of the Stabroek block, operated by a consortium of ExxonMobil, US-headquartered Hess and China’s CNOOC that in recent years has brought onstream Liza Phases 1 and 2, and Payara.
The Uaru project in Guyana, ExxonMobil's fifth major offshore development on the Stabroek block, is officially scheduled to come onstream in the second half of 2026. It will have a peak production capacity of 250,000b/d and remains under construction. The major and its partners have committed more than $60b to develop Stabroek, targeting 1.7m b/d by 2030. Guyana faces challenges, including a border dispute with Venezuela over the oil-rich Essequibo region. Political debates over fiscal terms and local content continue to emerge but are unlikely to disrupt ongoing upstream projects in the next 1–2 years.
Argentina: Vaca Muerta’s promise depends on infrastructure
Argentine officials told the International Congress and Exhibition Argentina Hydrocarbons event in October that the country’s oil output could reach 1m b/d. Argentina's Ministry of Economy estimated its production at 833,874b/d in September 2025. The country’s oil production is being bolstered by increased output from the Vaca Muerta shale. Drilling efficiencies, pad designs and completion techniques in this unconventional play now rival the best-performing North American basins. In 2026, upstream investment in the country is projected to reach $11–12b, according to Argentine officials, with more than $10b focused on Vaca Muerta drilling, completion and infrastructure expansion.
Argentina faces potential logistics slowdowns in Vaca Muerta if crude production grows faster than pipeline and port expansions, however. The country is on track to complete the Vaca Muerta Sur pipeline’s Phase 1 by Q3 2026, enabling evacuation of 190,000b/d, while Phase 2 (mid-2027) will raise throughput to 390,000b/d, with the potential to reach 550,000–700,000b/d after 2028. The Oldelval pipeline expansion entered service in early 2025, doubling capacity to 540,000b/d.
Venezuela: Upside potential, but structural limits
Venezuela remains the region’s biggest wildcard, especially due to US policy shifts. Even with selective sanctions easing, the country’s recovery capabilities are limited by deep structural challenges—including decaying infrastructure, chronic underinvestment, power shortages and shortages of diluent essential for upgrading heavy crude. Still, the country was able to produce more than 900,000b/d in 2025. Chevron, Italy’s Eni, Spain’s Repsol, and France’s Maurel & Prom have been granted limited waivers to operate joint ventures with state-owned PDVSA. Even with sanctions relief, $8–9b in annual investment would be needed to achieve significant growth, according to thinktank the Baker Institute for Public Policy. Therefore, modest incremental gains are possible in 2026, but Venezuela remains far from reclaiming its former production levels.
Ecuador, Colombia, Suriname and others: Small but strategic players
Ecuador’s oil output in 2026 is likely to be flat-to-slightly-lower than this year, as fiscal pressures and environmental constraints—including restrictions on development in sensitive areas such as Yasuni—act as a drag on production increases. Similarly, mature field declines, regulatory uncertainty and slow offshore developments limit Colombia’s upside potential for 2026. The state oil company is focusing on maximising output from existing blocks, particularly in the Llanos Basin.
Suriname, by contrast, is emerging as the next major frontier. In November 2025, its state-run energy company, Staatsolie, offered 60% of the country's offshore acreage for oil and gas exploration. Although first oil is not expected before the late 2020s, the offshore Block 58 discoveries operated by TotalEnergies and Houston-headquartered APA have progressed towards project definition. Other regional producers, such as Peru or Trinidad and Tobago, are making only marginal contributions to continental liquid supply.
South America’s oil outlook for 2026 is marked by both opportunities and challenges. Offshore growth in Brazil and Guyana promises optimism, while Argentina faces infrastructure issues and Venezuela remains constrained by structural limits. The region’s trajectory next year will depend on balancing investment momentum with regulatory, environmental and geopolitical risks.
Ehsan ul-Haq is Senior Oil Analyst at Petroleum Economist. This article is taken from our Outlook 2026 report. To read Outlook in full, click here.
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