PEMEX's Economic Struggles in a Shifting Global Landscape
From Brazil to Venezuela, and now most importantly, Mexico, the debate surrounding whether the state or private investors should own petroleum companies continues to be a leading discussion among Latin American business leaders and government officials. All three countries mentioned above have had their primary oil companies in state hands for over five decades; however, far from attractive track records featuring wavering production numbers and high costs have led to minimal and sometimes even zero profits (Britannica n.d.-a; Britannica n.d.-b; Britannica n.d.-c). Due to this year’s inauguration of President Trump, energy and economic independence have become leading concerns for the state. Because of this, the case of PEMEX in Mexico stands out from the rest of its fellow Latin American public oil and energy companies. This new political situation led left-leaning President Claudia Sheinbaum to, somewhat unexpectedly, consider a joint venture with the country’s private sector to improve PEMEX’s operations (Squires 2025a). However, this proposal is just one of many approaches posed as possible solutions to the unstable ground on which PEMEX currently stands. Therefore, although there is still plenty of dissent on what approach to take, the North American political landscape exacerbated PEMEX's already unstable economic situation, pushing urgency levels to an all-time high. Thus, if the Mexican government wishes to keep its prized national oil company alive, it must implement radical adjustments quickly.
The changing North American political and economic landscape is the first key point for explaining why PEMEX must implement radical change. With this general point in mind, Trump’s tariffs stand out as the leading force behind this evolving context. The new import duties stand at 25% for most imports; however, the importance of energy for development and growth led to the implementation of a lower duty of 10% on energy products (Risser and Kassai 2025). The duty stands at less than half of what other products are facing and the importers in the US, not the Mexican exporters like PEMEX, will be the ones responsible for covering the costs, the tariffs will have significant effects on the supply of oil available in the US (Risser and Kassai 2025).
The supply issue has one more level of depth with two more key subpoints: first, the effects of tariffs on the supply of high-value oils, and second, the potential for PEMEX to redirect its supplies due to the tariffs. Regarding the first point, Mexican oil has been a long-time staple for the American economy, and its unique natural features have led refiners to adapt their technology to produce high-value fuels like jet fuel from the raw material (Risser and Kassai 2025). This point is crucial because it emphasizes that tariffs will impact American oil importers and general consumers by raising prices and creating unnecessary logistical and infrastructural complications due to natural differences in the type of oil they will be using. Regarding the redirecting of Mexican oil, the continued sanctions on Russia have opened the European and Asian markets up for PEMEX (Risser and Kassai 2025). Shifting the trajectory of oil exports to Europe would mean significant increases in transportation costs for the company; however, the irrational nature of this trade war justifies these increased prices for the company. Margarita Perez—the chief executive officer of PMI, the international trading unit of PEMEX—cemented the company’s stance on international trade by saying that “if new opportunities in other markets open, we’ll pursue them and are pursuing them,” at a panel with the Mexican Senate (Mexico’s PEMEX looks to diversify 2025). Ultimately, this willingness to pivot from PEMEX shows that many of the issues stemming from the implementation of duties will land on the American side of the border, impacting both companies and consumers.
Although most of the consequences of Trump’s tariffs will affect people and companies within the United States, PEMEX’s reliance on American consumers means the company is very unlikely to come out of this current climate unscathed. Therefore, beyond simply pivoting where their supply goes, PEMEX must also implement significant changes to the company's structure and operations. The most important and drastic change currently on the table is the potential partnership with private entities, something started by Claudia Sheinbaum’s presidency in 2024 (Barrera & Oré 2024). At first, the proposed changes were radical, with reports emphasizing that collaboration with foreign energy interests and national business tycoons was the only viable path for combating the growing mountain of debt. However, the narrative surrounding privatization has been far from steady. In February, the government announced profit-sharing plans accounting for up to 10% of the company’s output (Squires 2025a). Shortly after, Reuters reported that Carlos Slim—a diversified billionaire looking to expand his stakes in the energy industry—was looking to help fund the ZAMA operation, a deepwater site in the Gulf of Mexico first discovered by Talos, a Houston based firm, but now majority owned by PEMEX (Barrera & Eschenbacher 2025). The high frequency of new reports regarding possible private ventures and collaborations shows that the Mexican government is exploring privatization as a viable path for growth and stability. Nevertheless, the relatively small amounts of control the government is willing to give up, as emphasized by the 10% profit share announced in February and the push for control of the ZAMA operation, show that drastic change is still improbable.
If PEMEX continues this pattern of constantly exploring options but never truly taking action, then it is doubtful that they will be able to find a way out of the deep hole of debt they currently sit in. Some positive news has come from their tame attempts at reform, the best examples being their repayment of 147 billion pesos (around 7 billion USD) and their increase of 33% in crude oil exports from January to February of this year, but the situation is far from bright when put in context (Mexico’s PEMEX swings to $9.1 billion loss 2025 Martinez 2025). Regarding the repayment of debt, PEMEX operated at an immense annual loss of 30 billion USD in 2024 and ended the year with a total debt of 97.6 billion USD, evidently showing that the current operations are far from sustainable (Squires 2025b; Mexico’s PEMEX has paid 147 billion pesos 2025). In terms of their increase in exports from January to February 2025, their February 2025 figures are down 25% compared to 2024, indicating that the significant month-over-month increase was negligible in the bigger picture (Martinez 2025). Together, the insurmountable debt and the decreased production show that PEMEX’s future is grim from all angles. Therefore, although further privatization could still be an option for saving the company, the current tame approach to privatization is evidently not viable.
Without a president who concretely backs PEMEX as a solely public venture, the long stretches of mismanagement and external economic pressure are finally catching up to the company. President Trump’s tariffs have worsened this situation, as, beyond the already enormous mountain of debt and inefficient operations, PEMEX’s leaders have to face new logistical challenges to account for changing global supplies. Privatization continues to be the most favored and newsworthy approach for turning the company around. Nevertheless, the consistently tame and underwhelming paths towards this separation from the government keep falling significantly short of creating visible change. Ultimately, these actions show that the Mexican government does not act rationally regarding its treasured national oil company, which is very dangerous for both the country and the government moving forward.
References
Britannica. (n.d.-a). Petrobras. In Britannica Money. Retrieved March 26, 2025, from https://www.britannica.com/money/Petrobras
Britannica. (n.d.-b). Petróleos Mexicanos (Pemex). In Britannica Money. Retrieved March 26, 2025, from https://www.britannica.com/money/Petroleos-Mexicanos
Britannica. (n.d.-c). Petróleos de Venezuela, S.A. (PDVSA). In Britannica Money. Retrieved March 26, 2025, from https://www.britannica.com/money/Petroleos-de-Venezuela-SA
Barrera, A., & Eschenbacher, S. (2025, March 14). Mexican tycoon Slim eyes two PEMEX key fields, gaining clout in energy sector. Reuters. https://www.reuters.com/business/energy/mexican-tycoon-slim-eyes-two-pemexs-key-fields-gaining-clout-energy-sector-2025-03-14/
Barrera, A., & Oré, D. (2024, August 9). Mexico’s incoming government wants to open PEMEX to oil partnerships, sources say. Reuters. https://www.reuters.com/business/energy/mexicos-incoming-government-wants-open-pemex-oil-partnerships-sources-say-2024-08-08/
Crude oil exports by Mexico’s PEMEX rise 33% from February to January. (2025, March 26). Reuters. https://www.reuters.com/business/energy/crude-oil-exports-by-mexicos-pemex-rise-33-february-january-2025-03-26/
Mexico’s PEMEX has paid 147 billion pesos in debt to suppliers, president says. (2025, March 26). Reuters. https://www.reuters.com/business/energy/mexicos-pemex-has-paid-147-billion-pesos-debt-suppliers-president-says-2025-03-26/
Mexico’s PEMEX looks to diversify market amid Trump tariff threats. (2025, March 25). Reuters. https://www.reuters.com/business/energy/mexicos-pemex-looks-diversify-market-amid-trump-tariff-threats-2025-03-25/
Mexico’s PEMEX swings to $9.1 billion loss in fourth quarter. (2025, February 27). Reuters. https://www.reuters.com/business/energy/mexicos-pemex-swings-91-billion-loss-fourth-quarter-2025-02-27/
Risser, M., & Kassai, L. (2025, March 4). Will Trump’s tariffs on Canada and Mexico drive up U.S. gas prices? Bloomberg. https://www.bloomberg.com/news/articles/2025-03-04/will-trump-s-tariffs-on-canada-and-mexico-drive-up-us-gas-prices?srnd=homepage-uk
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