Mexico, Venezuela Reconfigure the Oil Market

Mexico risks losing export market share in crude oil as Venezuela accelerates efforts to reinsert itself into global energy markets, a shift that could reshape regional dynamics and intensify pressure on PEMEX, according to the Mexican Institute of Finance Executives (IMEF). The warning comes amid a complex geopolitical realignment in which the United States is actively seeking to unlock Venezuelan oil flows, while Mexico has deliberately reduced its export orientation in favor of domestic refining.

At its monthly press conference outlining the 2026 outlook, IMEF cautioned that the reconfiguration of global energy politics could leave Mexico at a disadvantage. “We are exporting less and less, while they are doing everything possible to export more; comparatively, Mexico is going to lose market share because, in this administration and the previous one, it was decided that exporting oil was not a good thing,” said Víctor Manuel Herrera, President, IMEF’s National Committee of Economic Studies. By prioritizing refining over exports, he added, Mexico has incurred heavy losses that continue to weigh on PEMEX’s financial position.

IMEF’s assessment comes as Venezuela’s oil sector, long constrained by sanctions, mismanagement, and infrastructure decay, shows signs of renewed activity. Recent data indicate that Venezuela is already exporting more crude than Mexico, and volumes are expected to rise further in the coming years. While Mexico produces around 1.3MMb/d of crude, excluding condensates, exports have fallen to roughly 540Mb/d. Venezuela, by contrast, produces close to 1MMb/d and exports approximately 750Mb/d, with a strong focus on heavy crude grades similar to those produced by PEMEX.

The comparison is particularly sensitive given the vast disparity in reserves. Mexico holds an estimated 7.5Bb of proven reserves, while Venezuela possesses more than 300Bb, the largest in the world. Gabriela Gutiérrez, President, IMEF, noted that both countries would need to invest tens of billions of dollars to return to production levels above 3.2MMb/d, a process that would take between five and 10 years. Yet she warned that Mexico could still be at a disadvantage if Venezuela becomes more attractive to international investors.

This prospect has gained urgency following recent geopolitical developments. Recently, Chevron sharply increased its loadings of Venezuelan crude in early January 2026, reaching about 1.68MMb/d during the first week of the month, nearly five times the volume seen in late December. The shipments, tracked by Bloomberg vessel data, marked one of the fastest export paces in months and were primarily destined for US refineries operated by Chevron, Phillips 66 and Valero Energy.

The surge followed a dramatic intervention by the United States in early January, when US forces captured and removed long-time President Nicolás Maduro. Washington subsequently declared that it would control Venezuelan oil sales indefinitely, directing proceeds into accounts overseen by the US government. The stated objective was to stabilize energy supplies and prevent Venezuelan oil revenues from aligning with strategic competitors such as China. The Trump administration has framed the move as part of a broader effort to lower fuel prices domestically ahead of the 2026 midterm elections.

At the same time, US authorities are reportedly negotiating with Chevron to expand its license to operate in Venezuela. Such an expansion could allow greater crude volumes and reopen access to international buyers beyond the United States. Chevron’s unique position as the only Western supermajor still active in Venezuela gives it a strategic advantage, especially as global traders like Vitol and Trafigura explore ways to reengage with Venezuelan crude flows under evolving regulatory frameworks.

Yet behind the headlines of rising exports lies a more sobering assessment of Venezuela’s oil recovery prospects. Francisco Monaldi, Wallace S. Wilson Fellow in Latin American Energy Policy, CES, has consistently argued that expectations of a rapid rebound are misplaced. In his analysis on the limits of Venezuela’s oil recovery, Monaldi emphasizes that years of extreme politicization, corruption and underinvestment have hollowed out the sector. Infrastructure is severely degraded, operational capabilities have eroded, and much of the country’s technical workforce has been lost through migration.

IMEF echoes this view, stressing that the main obstacle to Venezuela’s recovery is not the lack of reserves or even capital, but the absence of political legitimacy. As highlighted in IMEF News, “Venezuela's oil cannot recover without democratic legitimacy.” Without a democratically elected and internationally recognized government, large-scale private investment remains highly unlikely. Even figures cited as initial commitments, around US$2 billion for rehabilitating existing operations, pale in comparison to the scale of investment required.

After more than two decades of mismanagement, Venezuela’s oil industry requires far larger sums, not only for physical infrastructure but also for rebuilding governance, institutions and human capital. Legal insecurity remains acute, with fragile property rights, weak contract enforcement and a judiciary lacking independence. These risks are compounded by documented links between political power structures, illicit economies and human rights violations, placing Venezuela outside the acceptable risk threshold for most institutional investors.

The Trump administration has nevertheless signaled interest in attracting investors willing to participate in Venezuela’s oil revival. From Washington’s perspective, increased Venezuelan production could ease global supply constraints and exert downward pressure on prices, aligning with domestic economic goals. However, this strategy faces structural limitations. Oil projects typically require at least three years to generate meaningful output, while political timelines are far shorter. The mismatch between electoral urgency and capital-intensive investment cycles creates inherent tension.

Moreover, any rapid increase in Venezuelan production could depress international prices, affecting producers operating near breakeven levels, including some in the United States. This market reality helps explain the cautious stance of many international oil companies, despite the geopolitical push to reengage.

Venezuela’s political landscape further complicates the picture. Following Maduro’s removal, Delcy Rodríguez assumed the presidency, signaling continuity within the existing power structure even as Washington presses for reforms. The US has warned that actions contrary to its policy priorities could expose Rodríguez to legal consequences under US law, underscoring the fragile and highly politicized environment in which energy negotiations are taking place.

For Mexico, the implications are significant. Expanded US involvement in Venezuelan oil could intensify competition in the Gulf and Atlantic markets, affecting PEMEX’s export strategy and pricing power. Analysts warn that Venezuelan heavy crude, reintroduced at scale, could divert investment capital and alter refinery feedstock dynamics, particularly in the United States. This would place additional strain on PEMEX at a time when it is already grappling with declining production, high debt and limited fiscal space.

IMEF also linked the potential loss of oil market share to broader macroeconomic risks. Herrera warned that Mexico’s high fiscal deficit, estimated at 4.5% of GDP, could threaten its investment-grade credit rating if spending is not curtailed. Debt levels approaching 58% of GDP, he cautioned, place Mexico uncomfortably close to thresholds that have triggered downgrades in other emerging economies.