South America’s largest economy, Brazil, is on track to become one of the world’s top five oil producers. During 2023, Brazil received an offer to join the OPEC+ price cartel, but it took until early 2025 for the government in the capital, Brasilia, to accept membership. This marked a significant change in government strategy, as President Luiz Inácio Lula da Silva sought to make Brazil the world’s fourth largest oil producer by the end of the decade. By joining OPEC+, Brazil can access considerable strategic resources to assist with the development of its offshore oil fields while contributing to price stabilization strategies and not being affected by production limits.
Over the past two decades, Brazil has experienced strong production growth, primarily due to huge pre-salt oil discoveries made in the Santos and Campos basins. The first pre-salt discovery was announced by Brazil’s national oil company, Petrobras, in 2006. This was the Parati discovery in the Santos basin, followed by the huge Tupi discovery, now called Lula. This light, low-sulfur oil, containing few pollutants, attracted considerable attention from oil majors and foreign energy companies. This sparked a wave of domestic and international investment, allowing Brazil to emerge as one of the leading non-OPEC oil producers and exporters.
Government data shows that Brazil ended 2024 with proven reserves totaling 16.8 billion barrels, representing a 6% increase from the 15.9 billion barrels of proven reserves reported a year earlier. The majority of Brazil’s proven oil reserves, 81% or 13.7 billion barrels, are contained in the prolific offshore pre-salt fields. Over the past decade, proven reserves have increased by a remarkable 29%, with considerable growth expected as drilling and other upstream activities expand due to increased investment.
While the hydrocarbons regulator, the National Agency for Petroleum, Natural Gas and Biofuels (ANP), has not yet published Brazil’s reserves figures for 2025, there are signs that they have returned to growth. Petrobras reported a 6% year-on-year increase in proven reserves for 2025 to 12.1 billion barrels. These reserves are weighted 84% by crude oil and the rest by natural gas. As Brazil’s largest oil producer, responsible for more than 70% of all oil extracted, this indicates that the country’s proven reserves also grew during 2025.
Large sums of money are flowing into Brazil’s prolific pre-salt offshore oil fields, driving greater hydrocarbon production. Data for January 2026 shows that an average of 3.95 million barrels of crude oil and 6.8 billion cubic feet of natural gas were extracted per day that month. This represents a notable increase of 14.6% and 20%, respectively, from the previous year, illustrating the pace at which production is expanding. Combined monthly hydrocarbon production reached almost 5.2 billion barrels of oil equivalent per day, an increase of 15% over the same period last year. However, this is below the record 5.25 million barrels per day reported for October 2025.
Related: Trump’s secret weapon in the rare earth war
The state-owned Petrobras, which is 37% owned by the Brazilian government, as part of its 2026 to 2030 business plan, will invest $109 billion between now and the end of the decade. Of that total investment, $91 billion is being directed toward projects currently being implemented, with $69 million earmarked for upstream operations, and 62% or $43 billion will be spent on pre-salt facilities. The remaining $18 billion is earmarked for projects currently under evaluation.
It is not just Petrobras that invests in Brazil’s prolific offshore oil fields; Foreign drillers are committing to develop operations. Low breakeven costs, estimated at less than $40 per barrel and expected to fall to $28 per barrel, are attracting considerable interest from international energy companies. The light, sweet, low-emission oil produced further increases the attractiveness of pre-salt fields for drillers looking to expand their operations. You see, pre-salt crude oil has an API gravity of around 30 degrees with a sulfur content of 0.3% and very few contaminants, such as vanadium, making it cheap and easy to refine into high-quality, low-emission fuels.
Brazil’s offshore oil industry is one of the lowest carbon emitters in the world, further increasing its attractiveness to foreign energy companies in a world where the fight against global warming is gaining momentum. It is estimated that only about 10 kilograms of carbon are emitted for every barrel extracted from Brazil’s prolific pre-salt oil fields. This is significantly less than the estimated 88 to 90 kilograms per barrel emitted by Venezuelan heavy oil production and less than the global average of 18 kilograms of carbon emitted per barrel produced.
As a result, the volume of investment in Brazilian pre-salt oil fields is expanding at a steady pace. According to the main industry body, the Brazilian Institute of Petroleum, Gas and Biofuels (IBP), investment in 2026 will reach $21.3 billion, the highest level ever reached. This, the IBP states, will support significant production growth and crude oil production is expected to increase to 4.2 million barrels per day, an increase of 6% from January 2026, by 2028. Natural gas production is expected to increase 30% compared to January 2026, to 8.85 billion cubic feet per day by 2029.
These figures are equivalent to a total hydrocarbon production of almost 6 million barrels per day. This is a notable increase from the 5.2 million barrels of oil equivalent produced during January 2026. Such strong production growth will see Brazil potentially overtake Canada to become the world’s fourth-largest oil producer, delivering a huge economic windfall for Brasilia, which can be used to finance further energy development along with the construction of infrastructure and other crucial facilities. This will generate considerable revenue estimated at over $42 billion for Brasilia, thus giving South America’s largest economy a huge economic windfall.
By Matthew Smith for Oilprice.com
More Oilprice.com Top Reads
Oilprice Intelligence gives you the signals before they become headline news. This is the same expert analysis read by veteran traders and political advisors. Get it for free, twice a week, and you’ll always know why the market moves before everyone else.
You’ll get the geopolitical intelligence, hidden inventory data, and market rumors that move billions, and we’ll send you $389 in premium energy intelligence, on us, just for subscribing. Join over 400,000 readers today. Get access immediately by clicking here.
