Western Oil and Gas Producers Are Ramping Up

After renewed fighting in the Iran war sent oil prices skyward last month (before cooling again), pundits rehashed warnings of energy supply shortages, as shipments from the Red Sea and Hormuz were presumed at risk. But here is the thing: Prices are signals. When elevated, responses should be expected. Today, more reports are emerging that producers outside the Middle East—especially in the Americas—are ramping up production and infrastructure buildouts. While some of this will take time to hit the market, it is all more evidence supply fears are bullishly false.

We have already highlighted America’s record (and rising) oil production today, which looks unlikely to abate soon. But it isn’t just the US: One International Energy Agency (IEA) study suggests production from the “Americas quintet” of the US, Canada, Brazil, Argentina and Guyana will “more than cover” rising global demand through at least 2030.^[i] While that is just a forecast, emerging data support the directional view, at bare minimum. Take Brazil. Its oil production rose roughly 19% y/y (4% m/m) in June, reaching a record 4.5 million barrels per day (bpd).^[ii] For context, Brazil averaged around 3.8 million bpd in 2025, so this represents a hefty increase.^[iii] Much of this output stems from offshore production in unconventional fields—the country’s deepwater pre-salt deposits.

Further supporting future supply, North American producers have added 65 new rigs this year, with 39 in the US and 26 in Canada.^[iv] And while rig counts aren’t a perfect indicator for future supply, adding more infrastructure supports producers’ ability to grow output should prices remain elevated. In Canada, the newly completed pipeline connecting Alberta to Pacific energy outlets can help service demand from Asia, too. War-related Middle East disruptions—be they from Iranian forces or Houthi rebels—can’t impede these flows. The overarching point: This added production can eventually fuel (ha) exports flowing without regard to the Strait of Hormuz, the broader war or even Russia.

Looking longer term, there are other underappreciated projects flying under the radar. Canada is leading the charge with two: One is a drilling resurgence in the long-overlooked Belly River formation, in an area called Willesden Green located near the Rocky Mountains.^[v] Here producers are pivoting from gas to oil drilling in the most active first six months in 14 years, with 15 drilling licenses granted year to date. This is a shale gas play tapped by fracking. It isn’t a huge source of oil or gas—but it is part of an overall picture that shows producers are advancing projects to boost oil output.

Canada is also planning to expand its pipelines—including a proposed 1 million bpd expansion of the line to British Columbia’s coast—to make it easier and more profitable to move Canadian product from Alberta’s oil sands to buyers, particularly in Asia.^[vi] And because the thick, heavy crude extracted here must be blended with ultralight crude or condensate before it can flow through a pipeline, the project may also promote further light-oil drilling in the US or Canada. The latest projections call for Western Canadian heavy output rising by as much as two million bpd over the next decade.^[vii] So while this longer-term project won’t affect supply over the next 12 or 18 months, it is a notable development in the Great White North’s longer-term effort to paint itself as a “safe hand” supplier.

Across Canada’s southern border, US natural gas production is also at record levels—and rising.^[viii] This offers European buyers an abundant non-Hormuz source to tap for liquified natural gas (LNG) stockpiling—something to keep in mind as headlines sweat eurozone natural gas shortages this winter.

Even with oil prices off the $100 per barrel mark so many consider magical, oil prices hovering in the $70s or $80s should be enough to support this continued growth. Now, production growth and investment could cool if and when prices fall further. But for now, they seem sufficient to keep the ramp-up … well … ramping up—especially with today’s uncertainty in the Persian Gulf region. Even beyond simple prices, many nations across Asia and Europe are seeking stable supplies amid wartime uncertainty (in Russia as well as the Middle East), so output from the Americas may be increasingly in demand.

Now, in our experience, investors often presume rising output must be great for Energy stocks—as was often the case during the early 2010’s US shale boom. Not so—prices matter much more than production volumes. Today, we suspect there will be energy price volatility. But with production quietly rising outside the war-torn areas—which seem less disrupted than feared anyway—we think it is unlikely oil prices rise materially from here. That suggests today’s rising North American output is part of an extant headwind for Energy stocks.