In terms of energy, Mexico and the United States have had a symbiotic relationship for many years. A significant portion of Mexico’s crude oil production is being exported to its neighbors in the north (primarily the U.S. Gulf) and U.S. refiners ship refined products back to Mexico. Due to the geographic proximity of these countries, this makes perfect sense.
During the period of 1995-2005, Mexico was competing with Venezuela, Saudi Arabia and Canada for the top-spot as the largest crude oil exporter to the U.S. That is no longer a competition: Canada dwarfs its previous rivals, while Saudi Arabia switched its focus more to Asia. Until U.S. sanctions hit Venezuela in 2019, export volumes to the U.S. from both regional producers remained fairly close, albeit at 50% lower levels than in the early 2000s. Unlike Canada, which almost exclusively uses pipelines, Mexico and Venezuela use tankers to ship their crude to the United States. For many years this has provided significant employment opportunities for Aframaxes in the U.S. Gulf region.
Since the end of 2023, however, Mexico’s exports in general and to the U.S. in particular have declined markedly. What is the reason for this decline and what will be the impact on the tanker market in the region and beyond? We will discuss that in today’s Tanker Opinion.