Reopening of the Strait Received With Caution: The Week in O&G

Neil Crosby of Sparta Commodities warns that the price collapse following the tentative US-Iran agreement to reopen the Strait of Hormuz underestimates the logistical friction of restoring physical oil flows. 

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Sparta Commodities: Oil's Post-Ceasefire Price Drop Is Getting Ahead of Physical Reality

Sparta Commodities expects a roughly US$5 knee-jerk drop on Friday's signing, with Brent potentially falling another US$5-10/b, but assigns 50% odds that Hormuz shipping fails to normalize quickly, since mine-sweeping, insurance underwriting, and fleet repositioning take months, not weeks. Crosby argues the US administration's persistent signaling of an imminent deal has suppressed prices below what physical fundamentals support, meaning prices could snap back once that "verbal" effect unwinds. For Mexico, the SHCP's revised US$77.3/b budget assumption sits close to current levels; a Crosby-style decline still preserves fiscal headroom, but a failure to normalize Hormuz quickly could repeat the volatility pattern Mexico's fiscal planners have already navigated three times since February.

BP Markets Stakes in Two US Gulf Megaprojects, a Signal for Mexico's Stalled Deepwater Ambitions

BP has begun selling minority stakes in its Kaskida and Tiber ultra-deepwater projects in the US Gulf of Mexico, each capable of producing up to 80Mb/d, as new CEO Meg O'Neill pursues a capital-recycling strategy that retains operatorship while bringing in partner funding. Both fields sit in the Paleogene formation, the same deepwater play that extends into Mexico's Perdido Fold Belt. The contrast is stark: BP operates seven deepwater hubs in the US Gulf, while Mexico has yet to produce a single barrel from deepwater after entering the space only in 2016. Trion, discovered in 2012 and developed with Woodside, remains Mexico's only deepwater project with a credible path to production, targeted for 2028. BP's disciplined, partner-funded approach to even its strongest US assets underscores the financing and execution gap PEMEX faces in advancing its own standalone deepwater program amid severe budget cuts.

IMF: Energy Market Normalization Will Lag the Ceasefire Announcement

IMF Managing Director Kristalina Georgieva welcomed the US-Iran ceasefire but cautioned that physical energy market recovery will take considerably longer than the announcement suggests, given significant Gulf infrastructure damage. She noted five of eight Gulf oil-exporting countries face outright growth contractions this year. The IMF will release revised global growth and inflation projections on July 8, the first comprehensive assessment of the war's actual damage against the range of scenarios issued in April. Markets, meanwhile, reacted faster than Georgieva's caution implied: WTI and Brent both fell to their lowest levels since early March on the ceasefire news. For Mexico, the SHCP's revised US$77.3/b budget assumption is broadly consistent with post-ceasefire prices, but a slower-than-expected physical recovery could sustain elevated prices longer than markets currently anticipate, prolonging both the export revenue benefit and the IEPS subsidy cost.

Oil Prices Plunge After US and Iran Announce Formal Agreement

Oil prices fell sharply after the US and Iran announced an agreement to lift the naval blockade and reopen the Strait of Hormuz within 30 days, with WTI sliding over 5% to around US$80/b and Brent falling 4.5% to US$83/b, both their lowest levels since early March. Trump confirmed the deal on Truth Social, though the agreement marks the latest in a series of announced breakthroughs since February that have repeatedly failed to hold, with strikes resuming after both an April ceasefire and a brief de-escalation in late May. Even at US$80/b, prices remain more than 20% above pre-war levels. For Mexico, a sustained decline would ease the roughly MX$2.5 billion weekly IEPS subsidy burden, but would simultaneously reduce per-barrel export revenue for PEMEX, whose export volumes already trail roughly 20% below the SHCP's annual target.

SLB Signs Long-Term Framework Agreement With Venezuela's PDVSA

SLB signed a long-term framework agreement with PDVSA on June 10 at Miraflores Palace, covering exploration, field development, digital enablement, and workforce training across Venezuela's oil, gas, and now mining sectors. The deal follows the Trump administration's stated daily contact with Venezuela's government on legal frameworks for foreign companies, signaling a broader push to convert the MoU into binding contracts. For PEMEX, the timing is uncomfortable: SLB and Carso held close to US$1 billion in overdue PEMEX invoices as of mid-2025, while active drilling rigs in Mexico fell 58% between January 2024 and 2025. Oilfield services capital and technical capacity flow toward markets offering clearer payment certainty and contractual terms, exactly the dynamic now drawing global service providers toward Venezuela and away from Mexico's payment-strained mixed contract model. SLB's existing Trion drilling contract with PEMEX and Woodside continues independently of these developments.

PEMEX Commits MX$93 Billion to Rebuild Petrochemicals and Cut Fertilizer Import Dependence

SENER and PEMEX unveiled a MX$93 billion (US$5 billion) Comprehensive Reactivation Plan for the Petrochemical and Fertilizer Industry spanning 2026 through 2030, the most significant downstream investment commitment PEMEX has made in at least two decades. The centerpiece is a MX$25 billion ammonia and urea plant in Poza Rica, Veracruz, expected to produce 708,000t of urea annually, alongside an MX$11 billion rehabilitation of the Cangrejera complex. The plan targets raising PEMEX's share of domestic urea supply from 19% to 84% by 2029, reducing Mexico's reliance on fertilizer imports from the US, Russia, and China. Independent analysts note the plan's credibility is undercut by PEMEX's MX$46 billion 1Q26 net loss, a 51% real-term capital expenditure cut, and the unresolved precedent of the Olmeca refinery, which took twice its original budget and arrived three years late.