Mexican Maya crude to face pressure from Venezuelan barrels as Mexico's exports fall

Mexican Maya crude will likely be exposed to pressure from Venezuelan barrels as Mexico's export availability shrinks and Venezuelan heavy crude reemerges in Atlantic Basin trade, observers and analysts said.

Venezuela will turn up to 50 million barrels of crude to the US, to be sold at market prices, US President Donald Trump said Jan. 6, a move market participants expect could reduce the attractiveness of competing heavy barrels.

"If more Venezuelan crude came to the US, it would need to be priced attractively," said Rick Joswick, global head of oil pricing and trade flow analytics at S&P Global, during a Jan. 8 webinar. "What would the US do? It would probably buy less feedstocks from others, like Mexican fuel oil."

Those displaced barrels would likely be redirected to other markets, he added.

Mexico's state oil company Pemex has been diverting a larger share of crude toward domestic refining under a government policy aimed at reducing reliance on fuel imports. As refining capacity expands with the start-up of the Olmeca refinery and higher utilization at legacy plants, total crude processed rose to 1.143 million b/d in November, up from 751,797 b/d in November 2024, according to Pemex data.

That shift has coincided with declining crude production, further reducing the volume available for export. Mexico exported 14.8 million barrels of crude in December, according to S&P Global Commodities at Sea data, down from 28.7 million barrels in December 2024 and 36.3 million barrels in December 2023.

As a result, Maya cargo availability has become less predictable, while Mexican fuel oil exports have also tightened as residual streams are increasingly absorbed domestically.

At the same time, Venezuela—home to the world's largest oil reserves—could lift crude production to as much as 1.5 million b/d in the medium term, said Andres Armijos, head of Latin American analysis at Welligence. Venezuelan heavy and extra-heavy crudes, largely produced in the Orinoco Belt, are re-entering global trade under evolving US policy.

Trump said Venezuela would transfer up to 50 million barrels of sanctioned crude to the US for sale at market prices, with proceeds controlled by the US government. Sales are being negotiated under arrangements similar to those used by international operators such as Chevron.

Price risks

Market participants and observers said the immediate effect is likely to be downward pressure on heavy sour crude and high-sulfur fuel oil prices, rather than outright displacement, as refiners and traders test Venezuelan barrels against established benchmarks.

"It could cause Mexico to have to look at adjusting the K factor accordingly if we see significantly more crude from Venezuela available to US refiners or redirect exports elsewhere," said Debnil Chowdhury, head of fuels and refining research for the Americas and Europe at S&P Global Energy.

Traders said that while Maya crude and Mexican fuel oil are largely covered by long-term contracts, those barrels could be at risk if Mexico fails to fully honor existing commitments or is forced to curtail deliveries due to declining production. In that scenario, Venezuelan barrels—despite logistical and compliance hurdles—could recover market, particularly among US Gulf Coast refiners with large coking capacity well suited to processing heavy sour grades.

Analysts cautioned, however, that Venezuelan crude is not a one-for-one substitute. Extra-heavy Venezuelan oil remains highly viscous and dependent on naphtha as a diluent, while infrastructure constraints and sanctions continue to limit sustained export growth.

More hurdles

Observers also warned that significant hurdles remain for additional Venezuelan supply to materialize, including legal and contractual frameworks and PDVSA's weak financial position.

Existing laws governing PDVSA joint ventures are widely seen as unattractive for new infrastructure and exploration investment, and would likely need to change to draw meaningful private capital, Armijos said.

PDVSA is typically required to hold a majority stake in joint ventures but lacks capital, shifting funding obligations onto private partners—a structure that undermines project economics and investor confidence. The company owes more than $150 billion to creditors, Joswick said.

Capital alone will not be enough to unlock Venezuela's recovery, Armijos said.

"It's not just about money—companies also need guarantees around physical security," he said.