Oil rose more than a dollar a barrel as supply shortages came back into focus when Saudi Arabia floated the idea of cutting OPEC+ output to support prices and the prospect of a drop of crude oil inventories in the US emerged. Even though Mexico’s export prices do not necessarily follow the trends set by Brent and WTI crude to a tee, PEMEX continues to benefit from higher oil prices as well.
Crude oil prices have soared in 2022, nearing a record high of US$147/b in March 2022 after Russia's invasion of Ukraine exacerbated supply concerns. Since then, concerns about a global recession, accelerating inflation and weakening demand have kept the prices in check somewhat. The possibility of a nuclear agreement between Iran and world powers, which would allow the country to increase its oil exports, also plays a part in the costs of crude.
To underline the tight supply, the latest weekly US inventory reports are expected to show a 1.5MMb drop in crude inventories.
Global benchmark Brent crude stood at US$100.22/b a barrel, up US$3.74, or 3.88 percent. US WTI crude settled at US$93.74/b. Brent reached its highest price since August 2 and WTI registered its best price since August 11.
National oil company PEMEX registered strong profits in 2Q22, and it owes these results to skyrocketing oil prices and strong export levels, which stood at 267Mb/d, a figure not seen since November 1998. The average export price in the sixth month of the year was US$108.86/b. On average so far this year, the price stood at US$97.81/b. However, according to official reports and industry analysts, this trend is not expected to continue throughout the remainder of 2022.
“Due to the high oil prices, the government announced a few months ago that it would change the strategy for PEMEX and go from producing [fuel products] to exporting, with the aim of obtaining higher income from the price of oil. Then, the strategy changed: the oil load to the six refineries for production was eliminated and it was decided to focus on exports instead,” said Arturo Carranza, Project Manager Energy, Akza Advisory to La Jornada.