Falling exports of Mexico’s Olmeca crude puzzles buyers
Reduced exports of Mexico’s lightest crude oil grade, Olmeca, is worrying regular buyers from Europe to the United States who are accustomed to a steady supply of Mexican oil and now are searching for cargos elsewhere, traders said.
Mexico did not export Olmeca in September, according to the most recent data available from state-run oil company Pemex. That’s the third month this year Mexico has not exported this grade, following no shipments in May and June.
The fluctuation in sales has caused exports of Olmeca to drop to 25,000 barrels per day (bpd) so far this year, while the country has slowed crude output in recent months due to lack of storage capacity. Mexico exported 108,000 bpd of Olmeca last year.
“Pemex has been using a larger volume of this grade to make other exportable blends,” one of the traders said.
A source at Pemex confirmed no exports of Olmeca were made in September. “But we increased exports of Isthmus crude,” he said. He declined to elaborate on the reasons for the decline.
Regular buyers of Mexico’s light oil in Europe have been unsuccessfully looking for supplies, traders said. The last time a cargo of Olmeca reached Europe was in August, according to Thomson Reuters trade flows data.
Several storms and a recent earthquake have affected Mexico’s output and exports. The country was forced to cut crude production in September to 1.73 million bpd from 1.93 million bpd in August, its largest monthly decline in 20 years, because storage tanks hit record levels.
Shipments to the United States, which used to be a large buyer of Olmeca with 2-5 cargoes per month, have sharply declined since 2016, according to Reuters figures.
Though the United States can easily replace imports of light grades with light, sweet domestic oil, buyers in Italy, Central America and the Caribbean could face difficulties finding similar grades, two traders said.
Export of other Mexican grades were more robust in September. Mexico exported 158,000 bpd of Isthmus medium crude, while exports of Maya heavy crude rose to 1 million bpd that month, according to the Pemex data.
Source: Reuters (Reporting by Marianna Parraga in Houston and Ana Isabel Martinez in Mexico City, with additional reporting by Julia Payne in London; Editing by Phil Berlowitz)