MEXICO CITY: Mexico’s state-controlled oil company plans to halt some crude exports over the next few months, a move that would cut supply in a tightening global market.
Petroleos Mexicanos (Pemex) cancelled contracts to supply its flagship Maya crude oil to refiners in the United States, Europe and Asia, according to people with knowledge of the situation who asked not to be named because the information is private.
The export cut, coming at a time when the Organisation of the Petroleum Exporting Countries and its allies (Opec+) is already curbing production, threatens to drive up oil prices that are at a six-month high. Physical supplies, especially heavier, sour grades such as Maya, are tightening even further, with Venezuelan exports set to fall after the reinstatement of US sanctions on its oil industry.
JPMorgan Chase & Co last week warned that global benchmark Brent could reach US$100 a barrel this year.
Pemex’s plan to suspend some exports is part of an effort to produce more domestic petrol and diesel ahead of the June 2 presidential election, the people said.
President Andres Manuel Lopez Obrador, whose term is coming to an end, won office with the promise of weaning the country off costly fuel imports.
His multi-year effort to revamp Mexico’s refining sector is finally paying off.
In February, the country’s six refineries operated at the highest rates seen in more than six years.
Oil use should keep rising as Pemex works to start commercial operations at the new Olmeca refinery, also known as Dos Bocas, with the capacity to process 340,000 barrels of crude oil a day.
Pemex didn’t immediately return calls and messages seeking comment.
The halt affects primarily exports of Maya, while shipments of other grades, including medium-sour Isthmus should continue at reduced volumes, the people said. It’s unclear if Pemex’s trading arm PMI will be able to follow through on the export cut.
In 2021 and later in 2023, the company had to shelve plans to halt oil exports after it failed to increase domestic fuel production.
The prospect of lower supplies from Mexico, the top supplier of crude oil to the US Gulf Coast, is supporting the prices of medium-sour Mars Blend produced in the Gulf of Mexico.
Mars traded at a premium of US$1.60 a barrel above futures on Monday, according to preliminary data from pricing agency General Index.
That would be the strongest since November.
US refiners are likely to bear the brunt of the cut in Maya exports.
Fuel makers including Valero Energy Corp, Chevron Corp and Marathon Petroleum Corp import 420,000 barrels of the heavy-sour variety per day.
In 2023, Maya exports reached 612,000 barrels a day. — Bloomberg