After Trump's tariffs on crude oil, Mexico is seeking Asian and European buyers
Pemex, the Mexican state-owned oil company, is currently in discussions with buyers in Asia and Europe. This is because it's looking for alternative markets to sell its crude oil after U.S. president Donald Trump imposed import tariffs.
This week, Trump implemented tariffs of 25% on goods imported from Mexico and Canada. Canadian crude was exempted from the 25% tax, but Mexican crude will be charged at a 10% rate.
Pemex exported 806 000 barrels of crude per day (bpd), of which 57% were shipped to the United States. Exports in January fell by 44% on an annual basis to 532 404 bpd. This was the lowest level for decades.
Kpler data shows that Mexico exports some crude oil to Europe and Asia, mainly to India and South Korea. However, its northern neighbor is the main recipient of heavy sour Maya.
A government official, who spoke on condition of anonymity due to the commercial nature of the discussions, said that Pemex was in talks with potential buyers outside the United States.
They said, "It's good to know that there is demand for Mexican crude in Europe and Asia." There's a demand for Pemex and heavy crude.
In the initial discussions, the official stated that potential Chinese buyers had shown "very high interest". He added that "demand would determine how these flows will be redirected."
PMI Comercio Internacional's (Pemex's international trading arm) confirmed that China, India and South Korea, as well as Japan, would be good markets for Pemex products despite tariffs.
One of these traders stated that only Asia could handle the volume of crude oil that wasn't sent to the U.S. because the refineries there are capable of processing that specific type.
Pemex and its trading arm did not immediately respond to a comment request.
No Discounts
Since weeks, traders have speculated whether the most indebted global energy company will offer a discount to U.S. customers as it attempts to retain them despite tariffs.
However, the official categorically denied such a concession, and stated that vessels would most likely be heading to Asia and Europe once current contracts with U.S. customers expire in this month. The source said that buyers in the U.S. had not discussed ending contracts.
Two sources from the trading arm confirmed that no discounts were planned to increase export competitiveness.
Mexico is a major oil producer, but the output of the older fields in the Gulf of Mexico has fallen to a record low.
The country's failing domestic refining system, and the long-delayed opening of the new Olmeca refinery at the port of Dos Bocas (which produces 340,000 barrels per day), has forced it to export crude oil and import gasoline and diesel — a large amount of which is from the U.S.
Mexico could even import crude oil in the future in order to feed its expanding refinery capacity within the next decade if it does not invest in exploration and production. This would be a previously unimaginable turn of events.
(source: Reuters)
