Guyana’s growing oil production, alongside increased output from the United States and Brazil, is helping to reduce the impact of disruptions to the Strait of Hormuz on global oil markets, according to Nick Wayth, Chief Executive Officer of the United Kingdom-based Energy Institute.
In a July 21 report, S&P Global cited comments from Wayth during a recent Center for Strategic and International Studies (CSIS) webinar, where he examined how increased production from the Americas has changed global supply dynamics amid heightened tensions involving the major oil shipping route.
Wayth, who has more than two decades of experience in the energy sector, said oil production from the Americas, which was roughly equal to Middle East output five years ago, is now about 20% higher.
“Now, the U.S. has clearly been the dominant driver for that…But it’s not just the U.S.; it’s been Brazil, it’s been Guyana contributing,” he was quoted as saying by S&P Global.
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According to S&P Global, Joseph Majkut, Director of the Energy Security and Climate Change Program at CSIS, said a similar disruption 15 years ago would likely have had a larger economic impact because Western Hemisphere production growth and global inventories were lower.
He said increased production capacity and stockpiles have provided more flexibility for markets during periods of supply uncertainty.
“We might see a period in the following years not of decreased demand, but actually of steady demand, not for consumption necessarily, but for building of new stockpiles,” Majkut said.
The United States remains the largest contributor to the increase, but Guyana has emerged as one of the fastest-growing producers through offshore developments in the Stabroek Block.
Guyana began producing oil in 2019 and has expanded output through four floating production, storage and offloading (FPSO) vessels currently operating offshore, helping push national production beyond 900,000 barrels per day.
ExxonMobil operates Guyana’s Stabroek Block with a 45% stake, with co-venturers Hess 30%, and CNOOC 25%. The Stabroek Block’s estimated resource base is approximately 11 billion oil equivalent barrels.
