Introduction
In a world where energy remains the driving force of global economics, oil continues to dictate geopolitical and financial decisions. After surpassing $80 per barrel at the start of the year, crude oil has retreated to levels between $60 and $70 per barrel, reflecting a blend of oversupply, uncertain demand, and geopolitical tensions reshaping the energy market.
OPEC’s Strategy Shift
Since April, the Organization of the Petroleum Exporting Countries (OPEC) has started to reverse its voluntary production cut strategy, increasing quotas by more than 2.5 million barrels per day (bpd), which accounts for approximately 2.4% of global demand. This decision responds to external pressures, including those from U.S. President Donald Trump, and the group’s desire to regain market share.
Upcoming Production Increases
OPEC is expected to announce another increase of at least 137,000 bpd in October. The United Arab Emirates has already received approval to boost production by 300,000 bpd due to strong demand in the Middle East. However, many members are operating near their capacity limits, potentially limiting the impact of these decisions.
Contradictory Market Signals
The market is caught between conflicting signals. On one hand, supply continues to grow, not only from OPEC but also from countries outside the group like Iraq, which has reactivated key oil pipelines. On the other hand, demand signals weakness in economies such as Mexico and the United States.
Global Oversupply and Economic Slowdown
The global oversupply and economic slowdown are factors that, together, fuel expectations of a prolonged period of low oil prices.
Geopolitical Risks
Despite these factors, risks persist, such as the ongoing war between Ukraine and Russia. Last week, Ukrainian drones struck a crude oil pumping station in the Chuvasia region, disrupting operations and causing damage to the Afipsky refinery, one of the largest in Russia’s south and a significant supplier to the Russian military.
These attacks, which weaken Russia’s military logistics, increase the risk premium in the global energy market and generate upward pressure on prices, albeit temporarily. Last Friday, WTI crude prices reached $65.72 per barrel and Brent at $69.22 per barbar in the futures market, marking a weekly increase of 4.37% and 4.78%, respectively. However, prices have dropped by 8.78% and 6.39% year-to-date.
Pemex: Navigating Global Pressures and Internal Challenges
Market conditions and price expectations significantly impact Pemex, which heavily relies on export revenues from crude oil, particularly the Maya type, primarily traded in Asian and U.S. markets.
So far this year, Pemex has exported over 900,000 barrels per day. However, the value of these exports has significantly decreased due to the international price drop, affecting its cash flow and operational, investment, and debt-paying capabilities.
In response to this situation, the federal government has included fiscal support for Pemex in the 2026 Economic Package, such as reducing the Utilidad Compartida Right, direct capital transfers to strengthen exploration and refining investment, and support for debt payments with critical due dates in 2026 and 2027.
While these supports are necessary, they increase perceived risk among rating agencies, negatively affecting Mexico’s ability to secure financing. Consequently, Mexico must reconsider its energy strategy, as it’s not just about increasing production but doing so efficiently, sustainably, and in line with the evolving global market realities.
Key Questions and Answers
- What is OPEC and why is it important? OPEC is an intergovernmental organization of 13 nations, founded in 1960, that aims to coordinate and unify petroleum policies among its members to ensure stable oil markets, secure fair revenues for exporters, and offer assured stability in oil supplies to importing nations.
- Why has OPEC changed its production strategy? OPEC adjusted its strategy due to external pressures, including those from the U.S., and to regain lost market share.
- What are the factors contributing to the current oil price fluctuations? Factors include oversupply, uncertain demand, geopolitical tensions (e.g., the Ukraine-Russia conflict), and global economic slowdown.
- How does the oil price drop affect Mexico’s Pemex? The decline in oil prices has significantly reduced the value of Pemex’s exports, impacting its cash flow and ability to operate, invest, and pay debts.
- What measures has the Mexican government taken to support Pemex? The government included fiscal supports for Pemex in the 2026 Economic Package, such as reducing the Utilidad Compartida Right, direct capital transfers for exploration and refining investments, and debt payment support.
