Guyana was already the world's fastest-growing economy before the war between the US, Israel, and Iran pushed oil prices higher. Now, as this conflict reshapes global energy markets, this small Caribbean nation of nearly one million people is poised for even greater wealth.
The war has caused one of the largest energy disruptions in history, highlighting the growing importance of countries like Guyana—politically stable nations with an estimated 11 billion barrels of oil reserves that are geographically free from transit restrictions. The windfall revenue from oil is putting pressure on the government, as business owners and local citizens demand that billions of dollars be used to develop other sectors of the economy.
President Irfaan Ali, speaking this month at Rice University's Baker Institute, stated, "There are too many examples around the world of energy booms that left behind ghost towns, deforested landscapes, and disgruntled populations. Guyana will not be that story."
A consortium led by ExxonMobil controls all of Guyana's oil production, ramping output to over 900,000 barrels per day in just seven years—a pace unprecedented in recent history, as offshore projects typically take twice as long to produce their first drop of oil. According to World Bank data, Guyana's GDP more than tripled from the start of oil production in 2019 to 2024, reaching $27.5 billion.
Guyana was previously one of the poorest countries in South America. In the capital, Georgetown, oil-fueled growth is visible everywhere—new modern office buildings, upscale hotels, and rows of single-family homes under construction that resemble houses in American suburbs. ExxonMobil billboards and ads from other oil companies play on the radio, a constant reminder of which industry is driving the growth.
**More Money, More Problems?**
The government's long-term challenge is to insulate the country from the invisible trap of oil price boom-and-bust cycles. Guyana need only look at neighboring Venezuela to understand how political dysfunction and over-reliance on oil revenue can destroy an economy, despite the latter possessing one of the world's largest estimated oil reserves. One part of Guyana's strategy is a sovereign wealth fund established in 2019 to hold all oil revenue, allowing the government to withdraw funds at a steady pace for development projects.
Since the Iran war began in late February, crude prices have risen 30%, potentially further boosting Guyana's oil income. Based on media calculations, assuming oil prices remain at $100 per barrel for the rest of the year, Guyana's share of oil revenue could reach approximately $4.3 billion at current production levels, a 67% increase from last year.
More significantly, Guyana is on track to begin receiving a significantly larger share of oil production sooner than expected. ExxonMobil states that the consortium currently takes 75% of the oil to recoup its initial exploration and development costs, which could be recovered this year. When that happens, the country's share of profit oil will climb from 12.5% to 50%.
Ali cautioned that expectations need to be managed, as any windfall from higher oil prices will be offset by rising import costs for nearly all goods, including fuel and fertilizer.
In his speech at the Baker Institute, he said, "This is the complexity of the messaging. When people wake up every morning and see headlines saying you have more money than you can spend, it creates a certain expectation."
The pace of some local infrastructure improvements has not kept up with the oil industry's development. Streets in Georgetown are lined with open sewage drains, and power outages remain frequent.
**A Changed World**
Guyana sits at the center of a region that includes established oil and gas economies like Venezuela and Trinidad and Tobago, as well as emerging Suriname. The area benefits from direct, unrestricted access to the Atlantic, without shipping chokepoints like the Strait of Hormuz that are vulnerable to blockades.
Tarron Khemraj, a professor of economics and international studies at New College of Florida, noted that Guyana's low breakeven price of $25 to $35 per barrel, combined with its proximity to the US market which supports fossil fuel development, further solidifies its long-term advantage. He has studied several Caribbean countries, including Guyana.
Spot prices for Guyana's four crude grades have surged over the past three months, prized for their light-to-medium, low-sulfur quality. The Liza benchmark price rose from $68.98 on February 27, before the Middle East conflict began, to highs of $120 per barrel.
Experts say that even if traffic through the Strait of Hormuz resumes soon and oil prices return to pre-war levels, Guyana's record as a geopolitically stable source of oil will be further cemented.
Khemraj said, "The war may end next month, but the world has changed."
Nevertheless, seemingly booming figures may mask the true state of the overall economy.
While Guyana has achieved double-digit GDP growth every year since oil production began, most of that growth is concentrated in the oil sector, not broad economic activity. According to government data, oil and gas and supporting services accounted for over 75% of the country's GDP last year.
**Sharing the Wealth**
To ensure more oil revenue benefits the population, the government is also moving to expand its local content law, initially passed in 2021. This law requires oil and gas companies to contract with Guyanese-owned suppliers and contractors in several specified areas, such as cleaning, food, or transportation.
The regulations mandate that oil companies procure a certain percentage of services from Guyanese businesses, for example, 25% of medical services and 90% of catering services. Michael Munroe, Director of the Local Content Secretariat, stated in an interview that the government is considering amending the law to add more service areas and increase percentage requirements in some existing ones.
Business owners say expanding these requirements will help support more jobs and the development of a skilled workforce.
Ayesha Wilburg, founder and CEO of a health clinic in Georgetown, said, "We are able to provide all the same medical services as the international companies."
Increased oil activity has also led to a sharp rise in demand for private transportation services in Georgetown, where residents often rely on taxis.
Nazim Baksh, General Manager of Sean's Transportation Services, said the company's staff has grown from 7 to about 20 people, and its fleet has been upgraded from sedans to include more SUVs.
However, challenges remain, including complaints from Guyanese business owners about so-called "fronting" practices. Discussion panels at the Guyana Energy Conference in February acknowledged this issue, where foreign companies use local entities but retain actual control of the business.
Vanita Ally, Medical Director and Founder of the local Guyanese medical center Phoenix Clinicare, said that obtaining certification to provide services to oil companies has not brought much extra revenue, and inflation is adding to her operating costs.
Ally said, "International companies are benefiting more from the oil industry than the locals."
As in other countries, drivers now pay higher prices for fuel, adding to cost-of-living concerns. Guyana has no refinery and must import gasoline, diesel, and other refined products.
Alistair Routledge, President of ExxonMobil Guyana, said at a press conference in March, "For a country like Guyana, which is now a net energy producer and exporter, higher oil prices can mean a positive thing, but that's not necessarily what people see and feel every day, because it means energy prices are going up."
"We recognize it's a mixed blessing for the people of Guyana."
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