leon lizarraga
43K posts
@leonpres
Coordinador @FLACMA Región Caribe y Centroamérica y Presidente del Consejo Directivo del Instituto de Administración Pública del Estado de Quintana Roo, A.C.
Mexico is effectively running on a countdown, fueled by a U.S. energy subsidy that is fast approaching its breaking point. The energy landscape is currently trapped in a high-stakes paradox: North American gasoline inventories have plunged to their lowest levels since 2014, yet the U.S. continues to push for record-breaking export volumes of crude and refined products. The U.S. is effectively subsidizing the Mexican supply at the expense of its own domestic buffer. This "artificial suppression" of prices (driven by strategic releases and political pressure to curb inflation before the summer) has prevented the necessary demand destruction that usually accompanies a supply shock. The structural fragility of this policy is now being exposed by the latest data. For the week ending May 8, the system saw a massive total crude draw of 10.31 million barrels, fueled by a record Strategic Petroleum Reserve (SPR) release of 8.6 million barrels and a commercial draw of 1.71 million. Furthermore, after an EIA miscalculation of imports and exports by approximately 6.6 million barrels last week, current estimates suggest a total crude draw of 11.6 to 12.6 million barrels for the upcoming report. This pressure is being intensified by a shift in Asian markets: as Asian refineries temporarily refuse to buy high-priced crude, global product storage will continue to draw down, forcing refining margins higher. Inevitably, as product levels run critically low, refineries will be forced to increase runs and crude buying simultaneously. This outcome is set to unfold within the next two weeks, accelerating the collision course with "tank bottom" by early July. For Mexico, this trajectory is nothing short of an existential threat. The Mexican energy model remains tethered to U.S. refining capacity, then any "tank bottom" event north of the border will trigger an immediate and non-negotiable halt in exports to its southern neighbor as Washington pivots to prioritize domestic stability. This looming shortfall is colliding with a Mexican fiscal reality where Pemex lacks the liquidity to compete for increasingly expensive spot-market cargoes. If the U.S. is forced to curb demand through drastic price hikes or export restrictions in July, Mexico faces a terminal supply gap that its current "sovereignty" rhetoric cannot fill. The math for Sheinbaum is cruel: a neighbor that cannot provide for its own citizens will not, under any circumstances, continue to fuel a non-cooperative neighbor’s economy.
