The shortage of heavy and medium oil supply in the global market due to Middle Eastern crises has created a deficit in global oil balance of approximately 1 to 2 million barrels per day. This crisis has particularly affected access to heavy oils, and the supply of alternative medium oil resources has significantly decreased.
Challenges in Oil Supply in Europe
Europe, which is heavily reliant on medium oil imports, is facing increasing challenges in this regard. The Johan Sverdrup field, the largest medium oil field in Europe, has peaked and is expected to decline by about 10% annually by 2026. Western sanctions have also caused Russian medium oil to largely exit the market. These restrictions have put significant pressure on the market, and in the event of disruptions, refiners have only two options: pay high prices for other medium and heavy oils, or use light oils and sacrifice the production of intermediate products.
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Growth of Oil Production in Latin America
Meanwhile, the growth of production at the Vaca Muerta field in Argentina has accelerated in recent months, and it is expected that with the launch of the new YPF pipeline in late 2026 or early 2027, oil supply will exceed 1 million barrels per day. In contrast, Brazil's oil production has stabilized, and growth in Guyana's production is expected to accelerate again with the commissioning of the latest FPSO unit. In this context, Venezuela remains an uncertain option that requires about $100 billion in investment and time for network repairs to increase production from 1 million to 2 million barrels per day.
Additionally, diesel imports in Latin America, which exceed 1 million barrels per day, are supplied by more than 85% from the Gulf states of the United States. With Russia removed as the main diesel supplier for Brazil, the country has become heavily dependent on the United States, while the supply from other sources is declining.
Finally, the oil supply crisis due to the attack on Saudi Arabia's East-West pipeline has severely impacted transportation rates and significantly increased costs. This situation has greatly affected the oil market in Latin America and has led to major changes in trade routes.
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