Peru’s Path Forward: Navigating Political, Economic, and Global Dynamics

Latin American Crude Oil Exports

This post is also available in: Español

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Facing growing competition for a shrinking US market, Latin American crude oil producers are being forced to seek new export markets. As Asian energy demand continues to grow, crude oil flows from Latin America are increasingly moving east rather than north. However, tapping markets outside of the United States also brings a new set of challenges.

Will these trends continue? The answer depends on whether Latin American countries maintain their links with the US market and whether political and economic ties with Asia continue to grow, according to a new report by Lisa Viscidi, Director of the Energy, Climate Change and Extractive Industries Program at the Inter-American Dialogue and Ramón Espinasa, Lead Oil and Gas Specialist at the Inter-American Development Bank.

Venezuela has longstanding links to the US oil market. Sales to the United States provide an important source of US dollars for Venezuela’s ailing economy. However, the relationship between the two countries has deteriorated, which partly accounts for Venezuela’s efforts to diversify its exports. Mexico is also closely linked to the US market through long-term supply contracts and established infrastructure. As the country’s energy reform brings fresh investment from international oil companies, new trade arrangements may appear.

According to the report, Latin America’s political and economic ties with Asia will have an important impact on crude oil trade between the two regions. Chinese and Indian companies have continued to increase their investments in Latin America’s oil and gas industry. They view the decline in oil prices as an opportunity to snatch up undervalued assets through mergers and acquisitions. If China and India continue to expand financing and investment in Latin America, the report suggests, crude oil trade will likely increase in spite of the short term decline in Asian oil demand growth, infrastructure bottlenecks, and competition from other regions.

Download the report below

Contact the Author:

Lisa Viscidi, Program Director, Energy, Climate Change, and Extractive Industries 
lviscidi@thedialogue.org
202-463-2571
@lviscidi

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