According to its latest monthly report, Mexico’s state-owned oil company Pemex is increasing its crude exports to the North American market. This redefinition of the export policy is accompanied by a significant reduction in shipments to Europe and Asia. This change can be understood from the US domestic demand for oil.
Pemex’s geographic redeployment
First, Pemex reports crude exports of 965,000 barrels per day (bpd) for the month of May. About 740,000 bpd are going to the American continent. The United States is the main recipient of Pemex’s shipments to the continent. Pemex’s May exports in the Americas should be compared with April’s data. Thus, the company shipped 594,000 bpd to the region, out of a total of 1.02 million bpd.
Second, Pemex’s exports to other continents are declining. For Europe, they represented 32,000 bpd in May. This number was 100,000 bpd in April. As for Asia, particularly the Far East, Pemx crude shipments fell to 192,000 bpd in May from 330,000 bpd in April.
The context of U.S. demand
First of all, Pemex does not explain the changes in exports to its partners. An understanding of the oil environment in the United States can lead to some explanations.
The country seeks to replace sanctioned Russian oil. In addition, the U.S. brings oil from strategic reserves to the domestic market, which requires replenishing stocks. With its production of 1.67 million bpd in May and its export volume of 930,000 bpd in the first five months of the year, Pemex is in a position to supply a quantity that could meet U.S. needs.
In addition, the U.S. is asking refiners to increase production to mitigate the spike in gasoline prices. For example, during the past month, U.S. refiners imported the most heavy crude oil in nearly two years, according to Customs data. In fact, demand is strong in the United States with a marked recovery since the end of the pandemic. For this reason, Pemex is supplying more crude to meet its partner’s demand.