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Mexican Crude Exports Increasingly Driven by Arbitrage as Atlantic Competition Intensifies, Kpler Says

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Mexico's crude exports remain centered on the Atlantic Basin, but changing market dynamics are making destination economics increasingly important as state oil marketer, PMI, seeks to maximize returns from a shrinking export pool, Kpler analyst Fred Asiedu said in a Thursday note.

Mexican crude has traditionally flowed to US Gulf Coast refiners, where the heavy sour grade, Maya, is well-suited to complex refining systems. However, the market has become more competitive.

Mexico's Dos Bocas refinery is absorbing more domestic crude, reducing export availability and contributing to a decline in Mexican crude arrivals at the US Gulf Coast since 2023. At the same time, recovering Venezuelan exports have restored a competing source of heavy sour crude for Gulf Coast refiners.

The tighter export balance comes as Atlantic Basin buyers gain access to a wider range of sour crude options. Reflecting those conditions, PMI cut June pricing factors across key markets, including a $7.30 per barrel reduction for Maya into Europe and the Middle East and a $4.20/bbl cut into India.

The move suggests PMI is positioning its barrels more competitively as refiners gain greater flexibility in feedstock selection.

Meanwhile, East Asia is emerging as a more attractive outlet for marginal Mexican cargoes. Kpler said its arbitrage analysis shows economics for July-loading Maya cargoes into complex East Asian refineries improved by about $8/bbl over the past month, making the grade roughly $4/bbl more competitive than Oman crude on a refinery-margin basis.

The improvement has been driven largely by lower crude costs, while firm diesel margins continue to support complex refinery economics.

South Korea has already begun testing those economics, with two VLCCs carrying Maya and Olmeca crude heading to Daesan after a six-month hiatus in Mexican crude imports.

While Mexico is unlikely to shift large volumes away from the Atlantic Basin, given limited export availability, improving Asian arbitrage economics suggest PMI is increasingly directing cargoes toward the markets offering the strongest netbacks rather than relying solely on traditional trade routes.

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