Imports of Fuel Products Increase

Amid the sudden rise in crude oil prices, the value of Mexican imports of petroleum products increased 77.2 percent during 1H22, up to a record level of US$22.9 billion, according to data from the Bank of Mexico (Banxico).

Between January and March 2022, the value of the NOC’s petroleum product imports, most of which is gasoline, stood at US$5 billion. This represented a US$2 billion increase compared to the same period last year, according to PEMEX’s data.

The state-owned company indicated that in 1Q22, the average reference price was 58.8 percent higher than that of 1Q21. “This happened due to the price increase in crude oil and growing demand. During the period, gasoline inventories in the US market remained aligned with the average of the past five years,” its report reads.

Furthermore, gasoline is the import demanding the most funding, with expenses of US$11.9 billion in 1H22, 80.2 percent more in comparison to 1H21. Nonetheless, diesel purchases resulted to be more dynamic and summed up to $US5.62 billion. Together, gasoline and diesel imports represent more than three quarters of the import value of petroleum products. The conflict between Russia and Ukraine has had a strong effect on fuel prices, causing costs to skyrocket.

According to the US Energy Information Administration (EIA), the spot price of regular gasoline in the Gulf Coast of the US grew 70.1 percent to a historical maximum of US$0.84/l for the average of 1H22. In Meanwhile, diesel spot prices also increased to US$0.88/l.

During the first half of the year, Mexico suffered a historical deficit in its commercial trade balance regarding petroleum of US$15.9 billion, 36.7 percent more than the one observed during the same period in 2021.

Although PEMEX benefitted from the increase of crude oil prices, this also translated to higher spending on the import of fuels, and the imbalances continued to grow worse.

President López Obrador plans Mexico to be self-sufficient regarding gasoline and diesel by 2024, but PEMEX foresees oil supply deficits as early as next year.

The state-owned company is anticipating a deficit of 47Mb/d in 2023 and 97Mb/d in 2024 for its crude supply. According to the NOC, this deficit is due to modifications at its Cangrejera plant, despite oil production being expected to jump 14 percent to 2MMb/d by December 2022.

Moreover, the NOC aims to increase refinery operation rates up to 86 percent in two years, an ambitious goal considering that in 2021, the refineries still operated at below half their capacity.