The Strait Closes, and Latin America Counts the Cost: Hormuz, Oil Prices, and Hemispheric Energy Exposure

As the IRGC reimposed its Hormuz closure on Saturday evening, the ripple effects for Latin America's oil-producing and oil-importing economies warrant scrutiny that the hemisphere's financial press has entirely failed to provide — because the story connects Venezuela's export revenues, Mexico's PEMEX calculations, and Ecuador's fiscal position to a conflict the Americas supposedly has nothing to do with.

By Monexus Staff WriterLatin America8-minute read18 Apr 2026☆ Save ↗ Share ⎙ Print

On Saturday evening, April 18th, the Islamic Revolutionary Guard Corps Navy reimposed what it described as a full Hormuz transit restriction, effective until Washington lifted its naval blockade of Iranian ports. Ships in the Persian Gulf were warned that attempting to approach the Strait without IRGC authorization would be treated as siding with the enemy. At least one vessel — an Indian-flagged crude tanker, the M/T Sanmar Herald — was intercepted during the afternoon while attempting to transit.

In the Americas, this would seem to be someone else's problem. Latin America produces oil. It has its own reserves, its own export relationships, its own price dynamics. Venezuela's Orinoco Belt, Mexico's offshore fields, Ecuador's Amazonian wells, Colombia's llanos — none of them move through Hormuz. The story, by the logic of the regional press, belongs to the Gulf desk, the Iran desk, the energy markets desk.

This is precisely the wrong way to think about it. The closure of the Strait of Hormuz — which in normal periods handles approximately one-fifth of globally traded petroleum and petroleum products — is a global price shock with direct, measurable, and politically consequential implications for every oil-exporting and oil-importing economy in the hemisphere. The failure to report those implications in regional terms is not an oversight. It is a structural feature of a press that treats Latin American economies as passive recipients of global dynamics rather than as actors embedded in a system whose topology they need to understand.

The Price Shock and Its Hemispheric Transmission

When the Strait closes or is threatened with closure, global oil benchmark prices respond immediately. The mechanism is direct: approximately 17-20 million barrels per day of petroleum and petroleum products have historically transited Hormuz, representing a substantial share of global supply. Any sustained disruption, or even credible threat of disruption, forces buyers and sellers globally to reprice risk, scramble for alternative supply routes, and adjust forward contracts. The price spike is immediate and often volatile.

For Latin America's oil exporters — Venezuela, Mexico, Ecuador, Colombia, Brazil — a sustained oil price increase is, in narrow fiscal terms, a revenue windfall. Venezuela's budget, already under extreme strain from the combination of sanctions-depressed output and the post-arrest political transition under Rodriguez, is directly sensitive to benchmark prices. Every dollar increase in the global benchmark translates to marginal revenue improvement for PDVSA, however constrained PDVSA's ability to capture that revenue remains under the existing sanctions architecture. Mexico's PEMEX, which has operated under significant financial stress and which the López Obrador government and now Sheinbaum have been committed to supporting as a national champion, similarly sees fiscal relief from sustained higher prices — though the relief is partially offset by higher domestic fuel costs and the political complexity of managing a state energy company that is simultaneously a welfare institution and a commercial entity.

Fernando Coronil's "magical state" concept applies here with particular force: the petrostate's ability to distribute social resources — and thus its political legitimacy — is directly tied to the price of the commodity whose rents it controls. When Hormuz closes and oil prices spike, petrostates in Latin America experience a transient surge in magical capacity — a brief, volatile moment of fiscal latitude.

The Import Side: Central America and the Caribbean

The story inverts when one turns to the oil-importing economies of the hemisphere, which include most of Central America, the Caribbean (excluding Trinidad and Tobago), and the Andean economies that are net energy importers. For these countries, a sustained Hormuz closure means higher fuel import costs, inflationary pressure on transport and food prices, and deteriorating current account positions.

Haiti — already operating under conditions of state near-collapse, humanitarian emergency, and gang-controlled territorial fragmentation — does not have a current account adjustment mechanism available to it. Honduras, El Salvador, and Nicaragua import petroleum products whose prices are determined by global benchmark movements. The Petrocaribe arrangements that Hugo Chávez established — which allowed Caribbean and Central American states to purchase Venezuelan oil on concessional terms, with payment deferred and partially convertible into goods and services — have substantially diminished as Venezuelan export capacity declined under sanctions. The safety net is no longer there.

Saskia Sassen's framework of "expulsion" operates at its most brutal here: the populations of small oil-importing economies in the Caribbean and Central America are effectively expelled from energy security by price movements whose causes are entirely outside their political control and in a conflict to which they are entirely peripheral. The energy price spike transmitted through Hormuz to Port-au-Prince or Tegucigalpa is not a natural event. It is the downstream consequence of geopolitical decisions made in Washington, Tehran, and Riyadh — and transmitted through a global commodity market that treats Haiti and Honduras as price-takers with no voice in the process.

USMCA, Canada, and the Refinement Calculus

There is a further dimension that receives virtually no coverage in either Latin American or North American financial media: the Hormuz crisis intersects with the ongoing renegotiation pressures around USMCA in ways that affect integrated North American energy trade. Canada, which exports heavy crude to US refineries that are calibrated for heavy feedstocks, faces a market in which Hormuz-driven global crude price volatility affects refinery margins and purchasing decisions throughout the supply chain. Mexico's crude exports to the United States, conducted through a complex web of pricing arrangements tied to global benchmarks, are similarly affected.

The US financial media's coverage of the Hormuz closure reflects a persistent ownership bias: the story is framed as a US-Iran confrontation with implications for global markets, with Latin America essentially invisible. The price transmission mechanism illustrates this starkly — Latin American economies are embedded in a global system designed to extract value from the periphery for the benefit of the core. When Hormuz drives oil prices up, the windfall accrues differently to different actors, with US financial institutions, major energy traders, and oil futures markets positioned to capture significant value from the volatility that smaller producing and importing nations in Latin America must simply absorb.

Stakes: Energy Sovereignty as Political Condition

The hemispheric stakes of the Hormuz crisis are ultimately about the relationship between energy sovereignty and political autonomy — a relationship that Latin American governments have been navigating since the first oil nationalizations of the twentieth century. Mexico nationalized PEMEX in 1938. Venezuela nationalized PDVSA in 1975 and again, in more radical form, under Chávez. Bolivia nationalized its gas sector under Morales. Ecuador renegotiated its oil contracts under Correa. Each of these acts was, in part, an assertion that resource rents belong to the people of the country from which the resources are extracted — the foundational claim of Latin American resource nationalism, articulated most memorably in Open Veins of Latin America and contested in every boardroom where Latin American energy assets are priced.

When Hormuz closes and oil prices spike, that question does not go away. It becomes more acute: who captures the windfall? Who absorbs the cost? The architecture of answers to those questions — the sanctions regime on Venezuela, the PEMEX financing structure, the Petrocaribe gap, the Caribbean energy poverty — tells the story of how hemispheric energy has been organized in favor of metropolitan actors and against the populations of the Global South.

Monexus noted that no major Western financial outlet placed the Hormuz closure in a Latin American economic frame — a coverage gap that illustrates the region's systematic invisibility in global commodity journalism.