Middle East Conflict Spurs Exploration Beyond Traditional Oil Regions

The global oil supply chain has been severely impacted by the ongoing conflict in the Middle East. The Strait of Hormuz, a crucial export chokepoint, saw oil flows averaging 7.6 million barrels per day (b/d) in August 2026, a staggering 13.1 million b/d below pre-war levels. This has led to a significant shortfall, with cumulative export losses approaching 2.8 billion barrels.

However, producers outside the Gulf have stepped up to fill the gap. Between February and August, these regions added a cumulative 420 million barrels of oil supply, equivalent to 2.3 million b/d. The US increased production by 520,000 b/d, Brazil by 470,000 b/d, Kazakhstan by 440,000 b/d, Venezuela by 300,000 b/d, and Nigeria by 200,000 b/d.

The International Energy Agency (IEA) projects the US, Canada, Brazil, Guyana, and Argentina to add 1.4 million b/d of production outside the Organization of the Petroleum Exporting Countries and its allies (OPEC+) in 2026. This will make the Americas a major source of incremental oil supply.

Despite the recovery of Gulf exports, exploration activity is now focusing on new oil regions to ensure diversified oil supply. The IEA projects global oil investment to fall below US$500 billion in 2026, marking a third consecutive annual decline. This will leave exploration projects competing for a smaller pool of upstream capital.

As a result, companies are prioritizing high-impact wells and concentrating exploration capital on fewer basins. The number of basins containing new-field wildcat wells fell from 130 in 2024 to 101 by December 2025, while only 17 contained high-impact wells.