Mexico Targets Asian and European Markets for Crude Oil Post-Tariffs

MEXICO CITY - In response to the recent tariffs imposed by the United States, Mexican state-owned oil company Pemex is actively seeking new buyers for its crude oil in Asian and European markets. This shift comes after U.S. President Donald Trump announced a 25% tariff on goods imported from Mexico, significantly impacting Pemex's traditional export avenues.

While Canadian crude oil exports were granted a 10% tariff exception, Mexican crude is now facing a substantial 25% tax. Last year, Pemex exported approximately 806,000 barrels per day (bpd) of crude oil, with 57% of that volume going to the United States. However, recent figures indicate a dramatic decline, with January exports plunging 44% year-on-year to just 532,404 bpd, marking the lowest level in decades.

Historically, Pemex has sent some shipments to Europe and Asia, particularly to countries like India and South Korea. Nevertheless, the bulk of its flagship heavy sour Maya crude has been directed toward its northern neighbor. A senior official from the Mexican government, who requested anonymity due to the sensitive nature of the negotiations, confirmed that Pemex is in discussions with potential buyers in non-U.S. markets.

According to the official, there is a growing appetite for Mexican crude in European and Asian markets. The demand for heavy crude, particularly Pemex's offerings, presents an opportunity for the company to redirect its exports. Initial conversations with potential buyers in China have reportedly shown strong interest, with the official noting that future demand will ultimately dictate how these oil flows are managed.

Traders at PMI Comercio Internacional, the trading arm of Pemex, have indicated that countries like China, India, South Korea, and Japan could serve as viable markets for the company's crude oil, particularly in light of the new tariffs, despite the increased shipping costs associated with these routes.

Speculation has surrounded whether Pemex would provide discounts to U.S. clients in an effort to retain their business amid the tariffs. However, the government official dismissed this notion, indicating that once current contracts with U.S. customers expire later this month, the focus will likely shift to Asian and European markets. There have been no discussions regarding the termination of contracts with U.S. buyers at this time.

Recent reports from the trading arm have confirmed that there are no plans to offer discounts to maintain competitiveness in the market. As a major oil producer, Mexico has faced challenges as production from its aging oil fields in the Gulf of Mexico has dropped to its lowest levels in over 40 years. Compounding this issue is the country's struggling domestic refining system and delays in launching the new Olmeca refinery, which is expected to have a capacity of 340,000 bpd in the port of Dos Bocas.

As a result, Mexico has continued to export crude oil while simultaneously importing gasoline and diesel, predominantly from the U.S. Without a significant increase in investment in exploration and production, experts warn that Mexico may find itself in a position of needing to import crude oil in the future to meet the demands of its expanding refining capacity over the next decade.