PEMEX’s Reserves Decrease: The Week in O&G

PEMEX's 1P proven reserves stood at 7.471Bboe at the close of 2025, down approximately 40% from 12.4Bboe in 2014, per the company's SEC filing. The headline decline, however, spans two distinct periods: a steep pre-2018 collapse driven by years of extracting more than was discovered, followed by modest post-2018 recovery averaging 0.9% annually. 

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PEMEX's Proven Reserves Have Fallen 40% in 11 Years But Replacement Rate Improved in 2025

The 2025 reserve replacement rate reached 102.6%, meaning the company technically added more reserves than it extracted in the year. At current production rates, the proven base provides approximately eight years and nine months of production life. The constraint on faster recovery is capital: exploration and extraction investment fell 51% in real terms in early 2026, and the active drilling rig count dropped from 32 to 25 between January and May. 

PEMEX Fuel Imports Now Exceed Crude Export Earnings

For the first time in at least 36 years, PEMEX is spending more on importing refined fuel products than it is earning from crude oil exports. In the first five months of 2026, crude exports averaged 431.8Mb/d generating US$1.087 billion per month, while refined product imports averaged 507.2Mb/d at a cost of US$1.601 billion per month, a 32% monthly deficit. Crude exports have fallen 65% from 2018 levels and 35% year-on-year, driven by the refinery-first policy redirecting crude to domestic processing. Refined product imports have also fallen, down 17% year-on-year, but more slowly. Even with May's exceptional US$100.7/b blend price delivering the highest export revenue since December 2024, the volume compression left total monthly revenues insufficient to close the gap. With Brent now near US$72/b following the Iranian sanctions waiver and the fifth consecutive OPEC+ quota hike, the price tailwind that partially cushioned the trade inversion through May is unwinding.

Hormuz Tanker Attacks Reverse Iran Sanctions Waiver Within 16 Days

The EIA's July 1 weekly report showed US crude inventories fell 3.8MMb and gasoline stocks dropped 2.3MMb, while distillate inventories rose an unexpected 2.5MMb, reflecting divergent recovery trajectories across product categories after the Hormuz disruption. Within the same week, Iran struck three commercial tankers in or near the Strait of Hormuz, including a Saudi vessel and a Qatari LNG carrier, prompting the US Treasury to revoke General License X on July 7, just 16 days after its issuance. The replacement General License X1 provides a 10-day wind-down period through July 17 for previously authorized transactions but prohibits any new purchases of Iranian-origin crude from July 7 onwards. The Joint Maritime Information Center raised the threat level in Hormuz to "severe." The reversal is one of the fastest sanctions policy shifts in the conflict's history and effectively resets the supply normalization clock.

Slim Sees Mexico Oil Output Doubling But the Numbers Tell a Different Story

At a UMAI engineering forum on July 1, Carlos Slim expressed optimism that Mexico's oil production could rebound to 2–2.5MMb/d in coming years, citing Trion's deepwater schedule with Woodside, the PEMEX-Petrobras MoU, and, most speculatively, the hypothesis that untapped Jurassic formations beneath the declining Cantarell Cretaceous layer could hold higher-quality reserves. The remarks mark a notable tonal shift from his May 27 characterization of Lakach as "irrational" and his statement that his companies were not seeking further PEMEX projects. The optimism is grounded in production that others will lead: Woodside operates Trion, Petrobras would bring deepwater expertise, and Slim has repeatedly expressed preference for onshore and near-shore assets. Current trajectory runs in the opposite direction: PEMEX liquid output stood at approximately 1.65MMb/d in 1Q26, rig count dropped from 32 to 25 between January and May, and GMEC projects a fall to 1.2MMb/d by 2027 at current investment rates.

OPEC+ Approves Fifth Consecutive Output Hike But Quotas Remain Largely on Paper

Seven OPEC+ members, Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, approved a further 188Mb/d output increase effective August, bringing the cumulative five-month unwinding to nearly 800Mb/d. Brent stood at approximately US$72/b, below its pre-conflict Feb. 27 settlement price, as markets priced in a gradual Hormuz normalization. Sparta's Neil Crosby characterized the quotas as "essentially meaningless" in the short term, given that most OPEC+ Gulf members remain physically constrained by the Hormuz disruption. Rystad's Jorge Leon warned that once the strait sustainably reopens, the market could face a surplus of approximately 5MMb/d, driven by returning OPEC+ supply, stronger US shale, and post-shock demand weakness. The risk is compounded by the UAE's exit from OPEC+ in April, now free to ramp up production without quota constraints, and Iraq pressing for higher allocations. For Mexico, the supply-side normalization trend directly compresses the export revenue windfall that elevated prices briefly provided, while easing the IEPS fuel subsidy burden simultaneously.