Tiny nation secretly reaps massive profits from US-Israel-Iran conflict

Jakarta, CNBC Indonesia - The global economy remains shrouded in uncertainty due to US-Iran geopolitical tensions. However, a small South American nation stands to benefit the most: Guyana. Guyana was already the world’s fastest-growing economy prior to the US-Israel conflict with Iran, which drove up oil prices. Now, the Caribbean nation of nearly one million people is set to reap even greater gains as the conflict reshapes global energy markets. President Irfaan Ali, in a speech at the Baker Institute, stated that this war, causing the largest energy disruption in history, highlights the importance of countries like Guyana, which offer political stability and unimpeded geographical access to an estimated 11 billion barrels of oil reserves. The substantial gains from the oil sector have prompted local businesses and residents to pressure the government to use billions of dollars to boost other economic sectors. “The world has seen too many energy booms leave behind ghost towns, depleted forests, and disillusioned populations. Guyana will not be a story like that,” he said in a speech at Rice University, according to Reuters on Monday, 1 June 2026. Oil production led by the ExxonMobil-led consortium has surged to over 900,000 barrels per day within seven years of the first major oil field discovery. World Bank data shows Guyana’s GDP has more than quadrupled from 2019 to 2024, reaching approximately $27.5 billion. Guyana has transformed from one of the region’s poorest nations into a new economic growth hub. Oil-driven expansion is evident across the capital Georgetown, where new office towers, luxury hotels, and suburban-style housing developments are under construction. Exxon and other oil companies’ advertisements also air on radio, serving as a reminder of the industry driving this growth. According to Reuters calculations, crude oil prices, which have risen 30% since the Iran conflict began in late February, could further boost Guyana’s oil revenues. Assuming oil prices remain at $100 per barrel for the rest of the year at current production levels, Guyana’s oil revenue is projected to reach $4.3 billion, a 67% increase from last year. Guyana is now set to receive a significantly larger share of oil production earlier than anticipated. The Exxon-led consortium currently takes 75% of oil to cover initial exploration and development costs, but is expected to recoup these expenses this year. Once achieved, the government’s share of oil profits will rise from 12.5% to 50%. However, the government’s long-term challenge is to safeguard the nation against the hidden pitfalls of oil-dependent economic cycles. Guyana need not look further than its neighbour Venezuela to see how political dysfunction and excessive reliance on oil revenues can cripple an economy despite vast reserves. One of Guyana’s strategies is its 2019 sovereign wealth fund, which will channel all oil revenues into steady development projects. Ali warned that expectations must be managed, as unexpected oil price gains will be offset by higher import costs for nearly all goods, including fuel and fertiliser. “This is the complexity of the message when people wake up each morning to headlines about the country’s newfound wealth, which fuels certain expectations,” he said in his Baker Institute speech. Moreover, local infrastructure has not kept pace with the oil industry’s growth. Open sewage channels line Georgetown’s streets, and power outages remain frequent. Guyana is situated in a region encompassing established oil and gas nations like Venezuela and Trinidad and Tobago, as well as developing sectors in Suriname. The area benefits from direct, unobstructed access to the Atlantic Ocean, avoiding vulnerable chokepoints such as the Strait of Hormuz. Tarron Khemraj, economics and international studies professor at New College of Florida, said Guyana’s low break-even costs of $25-$35 per barrel, coupled with proximity to the US market favouring fossil fuel development, strengthen its long-term advantages. Spot prices for Guyana’s four crude oil grades, prized for their light to medium sweet quality, have surged over the past three months, with the Liza benchmark peaking at $120 per barrel from $68.98 on 27 February before the Middle East conflict began. Even if shipping through the Strait of Hormuz resumes and oil prices return to pre-war levels, experts say Guyana’s geopolitical stability as an oil source will further solidify. However, the seemingly explosive growth figures may not fully reflect the overall economic reality. Despite Guyana recording double-digit GDP growth annually since oil production began, most of this growth is concentrated in the oil sector, not on