Rising Fuel Prices Pressure PEMEX Refining Push: Experts

6 days ago

101 3 minutes read

By Fernando Mares | Journalist & Industry Analyst – Fri, 10/02/2026 – 13:35 Idioma Leer en Español DIA assistant 1.0x ✕

Global oil benchmark surges above US$100/b have intensified the strategic trade-off in Mexico’s energy policy between achieving domestic fuel self-sufficiency and maintaining foreign exchange earnings from raw crude exports. While PEMEX’s increased downstream refining throughput successfully reduces fuel import dependency, record-low crude extraction levels limit export volumes during high-margin international price environments. This operational tension impacts energy market stability, public finances, and trade balances, directly affecting stakeholders across the oil and gas, refining, and industrial manufacturing sectors.

____

Mexico’s policy of prioritizing domestic refining over crude exports faces a crucial stress test as global oil benchmarks surge past US$100/b, experts stress. Although PEMEX’s downstream expansion has reduced foreign fuel dependency, historic lows in crude extraction leave the state oil company torn between feeding domestic refineries for energy sovereignty and exporting raw barrels to capitalize on surging international prices.

Global oil prices surged over 4% to a 16-week high in mid-September 2026, with Brent futures reaching US$109.29/b and US West Texas Intermediate (WTI) rising to US$104.26/b, driven by drone and missile strikes on Saudi military and pipeline infrastructure alongside maritime traffic through the Strait of Hormuz falling to single digits per day, as reported by MBN. These geopolitical disruptions in the Middle East, combined with Ukrainian drone strikes that reduced Russian refining capacity and prompted fuel export curbs, drove US retail diesel to an all-time high of US$6.06/gal and created global middle-distillate shortages.

Speaking at the Mexico Market Briefing event, José Verdugo, Fuel and Refining Analyst for the Americas, S&P Global, noted that the strategy is economically viable and supports energy sovereignty. He explained that global prices for diesel and refined products have risen faster than unrefined crude, making domestic transformation more value-accretive than selling raw materials abroad.

Data presented by S&P Global and reported by El Universal shows that Mexico’s average import dependency for gasoline, diesel, and jet fuel fell to 44%, down from 67% at the end of 2023. This decline corresponds to domestic fuel production reaching approximately 1MMb/d, driven by rehabilitation investments across existing refineries and initial output from the Olmeca refinery in Dos Bocas, which processed an average of nearly 250Mb/d in August 2026. However, Verdugo noted lingering operational vulnerability, stating that current national inventory levels cover fewer than 10 days of demand for gasoline and diesel, and 3 days for jet fuel, in the event of external supply disruptions.

This downstream push aligns with PEMEX’s official 2Q26 financial and operational results. During 2Q26, PEMEX reported liquid hydrocarbon extraction of 1.6MMb/d, supported by output from key fields including Ixachi, Bakté, Itta, Koban, and Maloob, while total hydrocarbon production averaged 2.44MMboe/d, representing a 4.6% increase relative to 2Q25. In downstream operations, crude processing across national refineries increased by 2.9% year-over-year to 1MMb/d, driving total refined product output up 3.4% to 1.03MMb/d, led by a 19.3% surge in diesel production,as reported by MBN.

Conversely, Expansión highlights the trade-off of reduced export revenue during a high-price international environment. While global integrated majors posted substantial earnings, with ExxonMobil reporting 2Q26 profits of US$14.05 billion and Chevron recording US$12.1 billion, PEMEX faced operational limits in capitalizing on global market pricing.

The Expansión report details that PEMEX’s crude extraction fell in August to 1.33MMb/d, representing a 2.7% decline compared to 1.37MMb/d in August 2025. This stands as the lowest monthly volume in the company's statistical tracking history dating back to 1990. Lower production coincided with a sharp reduction in crude exports, which dropped from approximately 450,000b/d in July to 275,737b/d in August, decreasing export revenue from US$1,052.6 million to US$626.9 million over that period.

While global integrated majors capitalized on surging refined product spreads, PEMEX’s crude extraction fell in August 2026 to 1.33MMb/d, representing a 2.7% decline compared to 1.37MMb/d in August 2025, marking the lowest monthly volume in the company's statistical tracking history dating back to 1990, as reported by Expansión. Lower overall extraction, combined with higher internal allocation to domestic refineries, caused crude exports to drop from approximately 450Mb/d in July to 275.7Mb/d in August. According to exploration and production expert Alma Porres, interviewed by Expansión, natural decline in mature fields like Quesqui and Ixachi will maintain downward pressure on total production until major deepwater and shallow-water assets, including Trion and Zama, officially come online to supply both domestic refineries and export commitments.