U.S. refiners have already reduced their intake of Mexican crude before the 25% tariffs that went into effect this week, Bloomberg has reported, citing nominations for delivery in March made in February.
According to these, Gulf Coast refiners had ordered some 410,000 barrels daily of Mexican crude, which represented a 17% decline on February nominations from the second-largest foreign supplier of crude oil for U.S. refineries after Canada.
In February, Bloomberg again reported that Gulf Coast refiners were shunning Mexican crude because of excessive water content. Instead, refiners were buying more Colombian and Canadian crude, or asking for discounts on the Pemex cargos, unnamed industry sources told the publication at the time. According to them, Mexico’s flagship Maya crude had a water content of as much as 6%, which is six times higher than the industry standard.
Pemex chief executive Victor Rodriguez acknowledged the problem, saying complaints have been made by buyers, citing high water content and also high salt content in the crude. “We don’t have problems in Pemex or with oil production, these are situations that occur and have occurred historically,” Rodriguez told Reuters. Mexican crude imports into the U.S. in January fell to the lowest in 35 years, at 321,000 barrels daily.
Pemex is working to boost both its oil production and exports. However, this will be tough with a revised budget that will be over $1 billion lower than previously projected as the company’s head of upstream operations scales back some well repairs plans and seismic data contracts. The approach to boosting production focuses on developing new deposits, especially in the deep waters of the Gulf.
Overall exports of crude oil from Mexico in January fell by a sizable 44% to around 530,000 barrels daily. That compared with an average 2024 daily rate of 811,000 barrels.
By Irina Slav for Oilprice.com
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