Mexico stirs the pot again: G20 Energy Ministers’ Meeting fails to resolve oil production cut issue! Experts cite two key reasons why oil-producing countries will be forced to halt production.

The day before, OPEC issued a statement announcing that OPEC+ had reached a preliminary agreement on production cuts: a reduction of 10 million barrels per day starting May 1, 2020, for an initial two-month period; from July onward, cuts would be reduced to 8 million barrels per day until December; and from January 2021 through April 2022, cuts would stand at 6 million barrels per day. However, due to Mexico’s refusal to accept the proposed production-cut plan, the OPEC agreement failed to materialize. Mexican Energy Minister Rocío Nahle García stated on Twitter that OPEC demanded Mexico cut output by 400,000 barrels per day, whereas Mexico was willing to reduce only 100,000 barrels per day. OPEC+, in turn, declared that no production cuts would proceed unless Mexico joined the agreement. Notably, Saudi Arabia and Russia emphasized that any production cuts would require action from non-OPEC producers—including the United States, Canada, and Norway. Mexico’s stance—and that of other oil-producing nations like the U.S.—drew intense attention during this G20 Energy Ministers’ Meeting. Originally scheduled to begin at 8:00 p.m. Beijing time on April 10 and conclude at 10:20 p.m., the meeting ran longer than planned—highlighting the difficulty of negotiations. Once again, Mexico emerged as the “spoiler.” Mexican President Andrés Manuel López Obrador stated that, amid this crisis, Mexico must honor its commitment to cut crude oil output—and that Mexico agreed to temporary reductions. Yet López Obrador stressed that Mexico could not match the scale of cuts made by other countries, noting it could not reduce output by 23% like others; instead, Mexico agreed to cut 100,000 barrels per day. Will the U.S. help Mexico shoulder part of the production-cut quota? Mexico’s desired cut volume fell far short of the 400,000-barrel-per-day target set by OPEC+. Market analysts observed that OPEC’s proposed cut for Mexico contradicted Mexico’s own goal of revitalizing its domestic oil industry. Mexico holds 6.6 billion barrels of proven crude oil reserves—the 18th largest globally—and petroleum remains a vital pillar of its national economy and primary source of fiscal revenue. Yet over the past decade, Mexican oil production has declined sharply—especially between 2004 and 2012, when daily output dropped by 40%. Mexico’s energy reform launched in 2013 yielded disappointing results, with domestic crude output continuing to fall—from 2.5 million barrels per day in 2013 to under 1.8 million barrels per day in 2018. Amid mounting economic headwinds, Mexico has consistently sought to revitalize its oil sector to boost the broader economy. In 2019, Mexico’s newly elected administration openly criticized earlier reforms and laid out new reform objectives, aiming to restore crude output to 2.4 million barrels per day by 2025—the pre-reform level. S&P Global Platts reported that Mexico had previously planned to announce a $13.5-billion investment initiative, which would raise Petróleos Mexicanos (Pemex) output to 2 million barrels per day by year-end. López Obrador candidly acknowledged that Mexico’s crude output had been declining for 14 consecutive years—explaining its resistance to deeper cuts. Notably, he added that he had spoken by phone with U.S. President Donald Trump on Thursday, who pledged to help Mexico shoulder an additional 250,000-barrel-per-day production-cut quota. Trump later confirmed that the U.S. would voluntarily cut an extra 250,000 barrels per day to ease Mexico’s burden—meaning Mexico would still need to cut only 100,000 barrels per day. Mexico may reciprocate through other means in the future.

Pemex’s third-quarter losses deepen.

Due to falling sales, exchange-rate volatility, and other factors, Mexico’s state-owned oil company Petróleos Mexicanos (Pemex) saw its third-quarter losses double—a negative signal for the carefully selected executive team appointed by Mexican President Claudia Sheinbaum. Pemex reported on Tuesday that its losses widened from 79.1 billion pesos ($8.1 billion) a year earlier to 161.3 billion pesos. Crude and condensate output from the exploration unit declined nearly 5% year-on-year—and has been trending downward since the start of 2024. The company reported net debt of $97.3 billion. This marks the first financial result under CEO Víctor Rodríguez—the former academic appointed by Sheinbaum to rescue the world’s most indebted major oil producer. Beyond its nearly $100-billion debt load, Pemex faces multiple challenges: poor safety and environmental records, an oversized workforce, inefficient offshore platforms, and money-losing refineries. Earlier this month, Mexico’s Senate approved a bill reclassifying the state-controlled energy giant as a “publicly traded company,” granting the government greater control while removing the legal requirement for profitability. This move could prove pivotal in helping Sheinbaum fulfill her pledge to repair Pemex’s finances and shore up one of Mexico’s economic crown jewels. Speaking at a Tuesday analyst call, Rodríguez said: “Reclassifying Pemex as a publicly traded company will not restrict collaboration with the private sector. Private investment will be especially welcome—particularly in cogeneration and clean-energy projects.” Pemex Chief Financial Officer Juan Carlos Carpio stated during a conference call that the company is currently working with Mexico’s Finance and Energy Ministries to address its debt burden. Carpio added that details of the debt-management plan would be unveiled after the Sheinbaum administration releases its 2025 budget—and that the company expects the government to provide fiscal support next year comparable to that offered in 2024.

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Mexico President Rebukes Officials Over Sliding Pemex Output

Mexico President Rebukes Officials Over Sliding Pemex Output

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