MEXICO CITY (Reuters) – Mexico’s state-owned oil company, Pemex, is actively exploring new markets in Asia and Europe to counter the impact of steep tariffs imposed by U.S. President Donald Trump, a senior Mexican government official confirmed.
This week, Trump enacted 25% tariffs on Mexican crude oil, while Canadian oil secured a reduced 10% levy. The move places Mexico at a disadvantage, as 57% of its crude exports—totaling 806,000 barrels per day (bpd) in 2023—were destined for the U.S. In January, exports plunged 44% year-on-year to 532,404 bpd, marking the lowest levels in decades.
Shifting Trade Routes
While Mexico has traditionally sent crude to India, South Korea, and some European markets, the bulk of its heavy sour Maya crude has historically gone to the U.S. refineries optimized to process it. Now, Pemex is actively engaging with buyers in China, India, South Korea, and Japan, according to two sources from PMI Comercio Internacional, Pemex’s trading division.
“The good news is that there’s significant interest in Mexican crude from European and Asian buyers,” said the government official, who spoke on condition of anonymity. Chinese refiners, in particular, have shown strong interest in initial discussions.
Due to logistics and refinery capabilities, Asia remains the most viable alternative for absorbing the volume previously shipped to the U.S., one trader noted. However, longer shipping distances to Asia mean higher transportation costs for Pemex.
No Plans for Discounts
Market speculation has swirled around whether Pemex would offer discounts to retain U.S. customers, but both government and trading sources firmly dismissed this possibility. Once existing contracts expire at the end of this month, shipments will likely be redirected to Asia and Europe, the official said.
While no U.S. buyers have signaled an intention to terminate contracts, Pemex appears resolute in shifting focus away from the American market in response to the tariffs.
Mexico’s Oil Industry at a Crossroads
Despite being a major crude producer, Mexico’s oil sector faces serious structural challenges. Production from its aging fields in the Gulf of Mexico has fallen to a 40-year low. Meanwhile, its refining infrastructure remains weak, with delays at the new 340,000 bpd Olmeca refinery in Dos Bocas forcing the country to import gasoline and diesel—much of it from the U.S.
If exploration and production investments remain stagnant, experts warn that Mexico could soon face the unthinkable—importing crude oil to sustain its refining expansion in the coming decade.
Related topics:
Seven & i Plans Leadership Change as President Isaka Set to Step Down
Seven & i CEO to Step Down, Stephen Dacus Named Successor
JX Metals Slashes Price for Japan’s Largest IPO in Seven Years, Raising Concerns About Market Demand
