The Hormuz Shock & Latin America: What the Iran War Has Cost the Region — and What Tonight’s Deadline Changes

MIAMI — The war between the United States, Israel, and Iran entered its 40th day on Tuesday in the most dangerous posture period yet. Explosions have been reported on Iran’s Kharg Island, which handles more than 90% of Iran’s oil exports, as President Donald Trump warned that “a whole civilization will die tonight, never to be brought back again” unless Iran agreed to a deal reopening the Strait of Hormuz by his 8:00 p.m. ET deadline (3:30 a.m. Persian Time).

The price of U.S. crude oil jumped more than 3% to nearly $116 per barrel after the first reports that the U.S. struck Kharg Island. Brent crude also jumped to more than $110 per barrel.

For Latin America, those numbers are not a world away. They are rising costs, inflation forecasts, and household electricity bills. The war that began on February 28 with coordinated U.S.-Israeli strikes on Iran has been reshaping the hemisphere’s energy economics for five weeks — and tonight’s deadline will determine whether that disruption deepens into something structurally transformative or begins, slowly, to ease.

The Largest Energy Disruption in Modern History

To understand what is at stake for Latin America, the scale of the underlying disruption must be clear. The war in the Middle East is creating the largest supply disruption in the history of the global oil market. With crude and oil product flows through the Strait of Hormuz plunging from around 20 million barrels per day before the war to a trickle currently, and with limited capacity available to bypass the crucial waterway, Gulf countries have cut total oil production by at least 10 million barrels per day.

Brent crude oil prices surpassed $100 per barrel on March 8, 2026, for the first time in four years, rising to $126 per barrel at their peak. The closure of the strait has been described as the largest disruption to the energy supply since the 1970s energy crisis, as well as the largest in the history of the global oil market.

Crude oil supply shortfalls are estimated at around 12 million barrels per day as the Strait of Hormuz remains strangled, resulting in a global supply shortage nearing 400 million barrels. Global natural gas supply has been massively undercut with Qatari liquefied natural gas offline, and LNG prices swelling as high as 143% in Asia.

The ripple effects beyond oil are equally severe. The Arabian Gulf accounts for at least 20% of all seaborne fertilizer exports, and the dependency is even more acute for urea — the world’s most widely used nitrogen fertilizer — with 46% of global trade originating from the region. This supply is critical for major agricultural economies, including Brazil, which imports approximately 10% of global urea supplies.

New Orleans fertilizer hub urea prices, for instance, have already risen from $475 per metric ton to $680 per metric ton, according to CNBC — a 43% increase that will feed directly into Latin American agricultural input costs during the Southern Hemisphere’s critical planting window.

Brazil: The Hemisphere’s Biggest Winner and Biggest Exposed

No country in Latin America has a more complex relationship with this crisis than Brazil. It is simultaneously the region’s largest oil producer, its largest agricultural economy, and one of its most logistics-dependent nations — a combination that puts it on both sides of the ledger simultaneously.

Brazil, the region’s largest oil producer at around 4 million barrels per day, is already exporting upwards of 3 million barrels per day. Shell Brasil president Cristiano Pinto da Costa called the U.S.-Israel-Iran conflict an “enormous opportunity” for Brazil to attract investment, citing the country’s geopolitical stability and reliability as a producer.

Petrobras shares surged in the days following the February 28 strikes, and the company has been actively redirecting barrels away from lower-paying markets toward Asia, where buyers desperate for non-Gulf supply are willing to pay premium prices.

According to Matt Smith, lead oil analyst for the Americas at commodity intelligence firm Kpler, for Brazil, it is less about increasing production and more about redirecting barrels away from the U.S. and towards higher-paying Asian markets — something it was already doing before the strikes.

The downside exposure is equally real, however. Rising LNG prices could feed directly into inflation, especially in Brazil, where goods are primarily moved by truck rather than rail. Because so much of the food, merchandise, and manufactured goods are traveling by road, rising fuel prices ripple across consumer products.

Brazil’s agricultural sector — the engine of the country’s trade surplus — faces a direct hit from the fertilizer price shock, with urea and nitrogen inputs surging at precisely the moment farmers are making planting decisions. The “enormous opportunity” of higher oil export revenues may be partially consumed by higher domestic fuel costs and agricultural input inflation.

Venezuela: The Reserves Paradox

Venezuela presents the hemisphere’s starkest paradox. The country holds the world’s largest proven oil reserves — estimated at over 300 billion barrels — yet crumbling infrastructure means the country produces only a fraction of its potential, currently about 1.2 million barrels per day. Even so, rising prices could deliver the country significant revenue.

The deeper constraint is political. A senior oil trader described receiving calls from buyers they had been unsuccessfully courting for years, who are now desperate to purchase Venezuelan oil and willing to seal deals with little or no negotiation.

However, trading houses would find it very hard to sell Venezuelan oil to China without the approval of the U.S. administration for the specific case of Venezuela.

Washington’s leverage over Caracas — already substantial following Maduro’s capture in January — is amplified by the Iran war. The acting Rodríguez government is managing its relationship with Washington on multiple tracks simultaneously: the Maduro trial, the transition process, oil sector liberalization, and now the question of whether Venezuela can capitalize on the global supply shock without running afoul of U.S. sanctions architecture. The prize is enormous. The constraints are equally real.

Ecuador: The Fiscal Exposure

Ecuador occupies a more exposed position than either Brazil or Venezuela. The country’s oil sector accounts for roughly a third of government revenues and is the primary source of the dollars that keep its dollarized economy functioning. Higher global oil prices are, in principle, positive for Ecuador’s fiscal position.

But Ecuador is also a significant importer of fuel products — particularly diesel and natural gas — and faces the same shipping disruption costs as every other economy rerouting supply chains away from the Gulf. The country’s fiscal outlook for 2026 was already precarious before the war, with IMF negotiations ongoing over debt restructuring. A sustained period of high oil prices, combined with elevated import costs and fertilizer inflation, creates a mixed picture that could tighten rather than loosen the fiscal space Quito needs.

Chile: The Most Vulnerable Importer

Among major South American economies, Chile carries the highest direct exposure. Chile is particularly vulnerable — described by analysts as a major importer in the region — which imports the bulk of its consumption, both in crude and in oil products. Chile produces virtually no oil domestically, making it entirely dependent on the international market at precisely the moment that market is experiencing its worst supply disruption in fifty years.

Higher energy costs feed directly into Chilean consumer prices, transportation costs, and the mining sector, which is itself energy-intensive and the backbone of the national economy.

The Fertilizer Threat to Regional Agriculture

The non-oil dimension of the Hormuz crisis may prove more durable for Latin America than the oil price shock itself. The Gulf region produces nearly half of the world’s urea and 30% of ammonia, with about one-third of the world’s fertilizer passing through the strait.

Urea prices have increased by 50% since the start of the war.

For a region where agricultural exports are the primary source of foreign exchange earnings — soybeans and corn in Brazil and Argentina, sugar across the Caribbean, coffee in Colombia — a sustained fertilizer shock hitting the 2026 planting season will produce export revenue effects that persist well into 2027, regardless of when the Strait reopens.

The potential shortage of fertilizers during the spring planting season could reduce the planting and yields of corn — the main feedstock for U.S. beef, poultry, and dairy — and potentially increase global food prices into 2027.

That effect is mirrored across the Southern Hemisphere’s own planting calendar.

Guyana: The Unexpected Beneficiary

One country in the hemisphere stands to benefit more clearly than any other from the sustained disruption. Guyana, small but oil-rich, has seen oil production growing rapidly, with new crude streams coming online that are beginning to reach Asian markets.

The developing situation is pulling more Guyanese barrels into Asia at a moment when Asian buyers are paying significant premiums for reliable non-Gulf supply. Georgetown’s windfall revenues from its relatively new oil sector — production began at scale only in 2020 — are being amplified by a crisis that was entirely beyond its making or anticipation.

What Tonight’s Deadline Means for the Latin Hemisphere

Vice President J.D. Vance said Tuesday morning that the U.S. is “confident it will get an Iran response” by the 8 p.m. deadline, and that there are “two pathways” essentially available — one involving negotiations, the other involving further military action.

Vance emphasized that U.S. military objectives have been substantially achieved.

Iran’s Revolutionary Guard warned it would “deprive the U.S. and its allies of the region’s oil and gas for years” if Trump follows through on threats to target civilian infrastructure.

Iran’s 10-point counter to the U.S. 15-point ceasefire proposal, reported Tuesday, showed some signs of willingness to compromise — the demand for U.S. reparations was dropped — but the gap between the two positions remains substantial.

For Latin America, the two scenarios carry asymmetric consequences.

A ceasefire or agreement to reopen the Strait — even a partial one — would bring immediate relief to the oil price, fertilizer cost, and shipping disruption pressures that have been building since February 28. The IEA’s coordinated emergency stock release of 400 million barrels provides a buffer, but in the absence of a swift resolution to the conflict, it remains a stopgap measure.

Markets would respond quickly to any credible signal of Hormuz reopening, and the relief would filter through to Latin American fuel import costs within weeks.

A failure to reach agreement tonight — and further escalation toward civilian infrastructure strikes — could risk pushing oil prices toward the $150-200 range that Wall Street analysts have begun modeling, trigger a second wave of shipping disruptions as insurance markets reprice risk, and extend the fertilizer shock through the Southern Hemisphere’s full planting season.

For countries like Chile and Ecuador, that scenario moves from manageable pressure to a genuine fiscal and inflationary crisis.

The Atlantic Council’s assessment is that the Western Hemisphere, while not immune to these risks, is poised to benefit for years to come from a renewed focus on energy security and diversification of supply — but those opportunities are not evenly distributed. Established and emerging energy producers like the United States, Brazil, Canada, and Guyana stand to gain. But others — like Mexico and Venezuela — could miss the wave of renewed opportunity.

The hemisphere is watching tonight from both sides of that divide. The outcome at 8:00 p.m. will determine which side each country wakes up on tomorrow.

This article was reported and published on April 7, 2026, as U.S. President Donald Trump's 8 p.m. ET deadline for Iran to reopen the Strait of Hormuz approached. The situation is developing rapidly. Subscribe to the outlet for the latest across Latin America — or contact us at info@sociedadmedia.com for questions or stories.