Hormuz crisis delivers LatAm oil windfall but exposes supply chains
The 38-day disruption of the Strait of Hormuz boosted fiscal revenues for South American oil exporters but exposed a critical vulnerability in regional fertiliser supplies and shipping logistics.
On February 28, 2026, military strikes on Iran triggered a 38-day closure of the Strait of Hormuz, collapsing daily crude flows from 20 million barrels to 3.8 million. Brent crude surged 55% to an intraday peak of $128 in March, an unprecedented monthly leap, before a Pakistan-brokered ceasefire on April 8 pulled prices back to $93.
The price shock delivered an immediate fiscal windfall to South America’s net oil exporters. Petrobras, alongside state coffers in Colombia and Argentina, saw export revenues surge. This provided crucial support for the Brazilian real and gave Brasília breathing room on a tight fiscal calendar as global credit conditions tightened.
Conversely, Central American and Caribbean nations faced severe balance-of-payments strain. Without domestic hydrocarbon reserves, countries like Guatemala, Honduras and El Salvador absorbed skyrocketing fuel import bills that triggered transport strikes and drained foreign reserves. Island economies also suffered a dual blow from reduced tourism and crippling diesel costs for power generation.
The most consequential fallout for global commodities markets originated in Brazil's agricultural sector. As the world's top exporter of soy, corn, beef and sugar, Brazil sources 41% of its urea through the Strait of Hormuz. The disruption and subsequent spike in energy-intensive nitrogen fertiliser prices threatened planting windows in key farming states, forcing agribusiness groups to lobby Brasília for emergency tax breaks.
Global shipping rerouting compounded the regional crisis. Vessels diverting around the Cape of Good Hope added 10 to 14 days and roughly $500,000 per bulk carrier in extra costs. This shredded vessel schedules, causing severe port congestion at Santos and Callao. A July report from Maersk warned that simultaneous regional disruptions indicated a deeply brittle logistics system, pushing shipping executives to abandon lean supply chains for "just-in-case" inventory models.
The Panama Canal, still recovering from prior drought restrictions, saw a surge in traffic from vessels seeking a neutral passage, prompting toll increases and transforming the waterway into a focal point for US and Chinese strategic surveillance. Meanwhile, Peru and Chile are expanding port capacity to capture diverted transshipment traffic from Asia, setting up a competition for infrastructure financing between Chinese lenders and Western development banks.
These infrastructure battles align with a broader US strategic pivot following the capture of Venezuelan leader Nicolás Maduro, confirmed in a Lazard geopolitical report. Analysts at Robeco and the Atlantic Council have labelled the new US posture "Monroe Doctrine 2.0." Stabilising Venezuela's oil fields for Western investment could establish a major supply node just 40 hours from US Gulf Coast refineries, fundamentally reducing Latin America's exposure to Middle Eastern chokepoints.
