Pemex talks with Asia and Europe to export crude oil after tariffs

MEXICO - Pemex has been looking for alternative markets for its crude oil in the face of the imposition of tariffs in the United States, the main destination for its exports, and has been talking to companies in Europe and Asia, including China, where there is “appetite” for Mexican crude, a government source said.

President Donald Trump made good on his threat to impose 25% tariffs this week on products from Mexico and Canada, as well as doubling them on Chinese products to 20%, which could jeopardize nearly US$2.2 trillion a year in trade with his three main trading partners. The levies on Canadian crude oil will be 10%.

The United States is the destination of 80% of Mexican exports and the main buyer of Mexican oil exports. Pemex sends a portion to Asia and Europe, but the northern neighbor receives 75% of the heavy Mayan crude that the oil company exports.

“We have already been talking to others. The good thing is that there is appetite for Mexican crude in Europe, in India, in Asia,” said the high-level Mexican government source with knowledge of the talks.

“There is demand for heavy crude and Pemex crude,” he added when asked if the Mexican oil company was looking for other export destinations.

The source, who spoke on condition of anonymity, referred that China is “very interested” in Mexican oil, according to the conversations they have had.

“The demand is where these flows are redirected to, how they are being rearranged,” he added, referring to what would happen in the event that tariffs now make it difficult for Mexican crude to access the United States.

Two sources at PMI, Pemex's trading arm, have told Reuters that India, China, South Korea and even Japan would be the natural market for Pemex's heavy crude after the imposition of tariffs. One of PMI's sources said that “only Asia” could take the volume that would not be sent to the United States given the type of refineries in that area, suitable to receive the processing of Mexican heavy crude.

Pemex did not immediately respond to a request for comment from Reuters.