Little-known fact: The United States imports 31% of all Brazilian oil exports. This is the easy answer to the question of who fills the void if upheaval in the Middle East interrupts oil production. Brazil will not be a pushover when it comes to pumping all that crude oil up north. For one thing, the United States still imports a lot of petroleum from Saudi Arabia, Algeria and Iraq -- maybe 2 million barrels a day. Petrobras ( PBR , quote ) is currently producing 2.6 million barrels a day and domestic consumers need about 1.9 million barrels of that. That leaves 700,000 barrels a day free for export, and the United States already buys 200,000 barrels of that. So PBR could effectively cover for a disruption in Algeria by diverting all spare production from existing customers, but not a more serious outage in Saudi Arabia. It is true that PBR wants to double its production capacity in the next 10 years, which would then theoretically let it replace the Saudis in the long term -- provided of course that domestic demand does not rise along with it, which many people think it will. Either way, PBR will reassert itself as one of the most important companies in the world. With crude at $110 a barrel, they will have access to all the free cash flow to fund all the capital expenditures they need to develop their assets. And by the way, at $110 a barrel, Gazprom ( OGZPY , quote ) management just cannot steal enough from the company's bottom line to make this story go sour. Yesterday, we saw Petrobras spike on collective influences. We have covered the deep water prospects in the Carioca field . Bringing this and other discoveries online stands a good chance of boosting Petrobras production 100% to 4 million barrels of crude a day - and that, in turn, should at least move the revenue dial by a substantial amount. Previous coverage - ( Petrobras sees domestic oil demand rising ); this should keep rolling.
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