U.S. Could Step Up Brazilian Oil Purchases

Following talks with Brazilian President Dilma Rousseff, President Obama said the U.S. would like to become a major buyer of Brazilian crude in the future. The two are meeting in Brasilia this weekend.

Obama made the comments as violence in Libya escalates. While the North African country, the continent's third-largest oil producer, isn't a major supplier of oil to the U.S., the situation there underscores the risks to the U.S. with regards to securing oil resources from unfriendly regimes.

Before Obama's arrival in Brazil, Rousseff made the compelling argument that her country is one of only a few that has vast oil resources that doesn't have to contend with military violence or political uprisings. Brazil is South America's second-largest oil producer behind OPEC member Venezuela.

News of increased oil ties with the U.S. could be a boon for Petrobras PBR, Brazil's state-controlled oil giant. Petrobras is on the receiving end of most of the government-awarded contracts to tap Brazil's vast pre-salt oil reserves. The company pumped roughly 2.6 million barrels of oil per day in January, but is looking to boost its output to 4 million barrels a day by 2020.

Brazil's pre-salt fields may contain up to 50 billion barrels of reserves and that number comes with much of the areas still unexplored. That would be enough oil for Brazil to jump to fifth from 15th among the world's largest oil-producing countries, according to the Financial Times.

In December, Brazil was the eighth-largest supplier of crude to the U.S., according to the U.S. Energy Information Administration. That ranks the South American country behind such countries that are hostile to the U.S. as Saudi Arabia, Nigeria, Venezuela and Angola.