Latin American Oil Majors feel the heat of the latest Covid wave
Many of the larger oil companies on the continent are hit substantially.
Justin Wong (JW)October 5, 2026
Despite lengthy lockdowns and closed borders across South America, the continent is one of the hardest hit by the COVID-19 pandemic. Three countries, Brazil, Argentina and Colombia are in the top 12 countries with the most cases, while Brazil and Colombia are in the top 12 countries with the most deaths worldwide. A third devastating virus wave is spreading across South America, triggering further lockdowns and movement restrictions to slow the spread of the virus, while the health systems of many countries are overwhelmed with the situation and are reaching their limits. The economic consequences for the region are already devastating: According to the IMF, South America's gross domestic product shrank by almost 7% in 2020, making it one of the worst performing regions in the world. The pandemic has hit South America's hydrocarbon sector hard. Energy companies were forced to cease operations in response to the collapse in crude oil prices in March 2020 and to comply with government efforts to contain the coronavirus. This has only increased the economic damage, especially in countries like Colombia and Brazil, which are economically dependent on oil production. There are growing fears that the recent wave of viruses sweeping South America will force further closings and shutdowns in the oil industry. The arrival of a third wave of the virus in South America, believed to have originated in the Brazilian Amazon, is having a serious impact on the continent. Not only does it seem more contagious and deadly, it also threatens the continent's expected economic boom. At the beginning of the year, the IMF forecast that South America's GDP will grow by 4.4% in 2021. Brazil has the highest number in South America with over 14.5 million confirmed COVID cases and ranks third in the world, behind the US and India. The largest economy in Latin America has hit over 398,000 deaths, putting Brazil behind the US and ahead of Mexico. Virus outbreaks on offshore oil platforms have already forced Brazil's national oil company Petrobras to temporarily suspend some operations, affecting production and delaying the first oil at the Mero oil field in the offshore Libra block. In the first quarter of 2021, Brazilian oil production declined 5% year-over-year, showing the extent to which the recent virus outbreak is affecting the operation of the petroleum industry. Data from the Brazilian Petroleum Regulatory Authority (Portuguese) shows that hydrocarbon production fell 0.2% to 3.6 million barrels of oil equivalent per day in March 2021 compared to the previous month, which was also 93,551 barrels less than in January. There are growing fears that the recent COVID outbreak in Brazil could derail the country's massive petroleum, which appeared immune to the pandemic. That would severely affect the Brazilian economy and slow growth and be well below the 3.7% estimated by the IMF for 2021. Colombia, Latin America's fourth largest economy and third largest oil producer, resumed lockdowns in many of its major cities about two months ago when a third wave took a fatal toll in the Andean country. These events and the rapidly increasing number of cases, which according to the World Health Organization has reached 2.8 million confirmed COVID cases and nearly 73,000 deaths, threaten Colombia's economic recovery and vital oil industry. Colombia's economy contracted nearly 7% in 2020 and should grow 5% this year, but recent developments threaten that forecast. The government's budget deficit for 2021 has blown over 9% and finances are in ruins. Economically important oil production, accounting for over 30% of exports, 3% of GDP and 17% of tax revenue by value, remains weak as Colombia produced only 745,769 barrels a day in February 2021, a worrying 15% less than last year. Poverty is skyrocketing in what was the second largest inequality country in Latin America before the pandemic: it is estimated that up to 49% of the population live in poverty. This in turn leads to a significant increase in violence, lawlessness and crime. Raids on oil fields are increasing, as is the theft of crude oil, which, according to the Colombian state oil company Ecopetrol, was 46% higher than the previous year at the beginning of 2021. There have recently been protests in major cities against President Duque's proposed tax reform, unwillingness to implement the three-year-old peace agreement with the FARC, and increasing violence.
