• 4 minutes Ten Years of Plunging Solar Prices
  • 7 minutes Hydrogen Capable Natural Gas Turbines
  • 10 minutes World looks on in horror as Trump flails over pandemic despite claims US leads way
  • 13 minutes Large gas belt discovered in China
  • 42 mins Would bashing China solve all the problems of the United States
  • 3 hours Let’s Try This....
  • 3 hours COVID 19 May Be Less Deadly Than Flu Study Finds
  • 4 hours Chicago Threatens To Condemn - Possibly Demolish - Churches Defying Lockdown
  • 1 hour 60 mph electric mopeds
  • 1 hour Pompeo's Hong Kong
  • 2 hours New Aussie "big batteries"
  • 6 hours China to Impose Dictatorship on Hong Kong
  • 21 hours The CDC confirms remarkably low coronavirus death rate. Where is the media?
  • 4 hours Monetary and Fiscal Policies in Times of Large Debt:
  • 3 hours Oil Markets Could Soon Face A Devastating Supply Crunch
  • 17 hours Backlash Against Chinese
  • 2 days Iran's first oil tanker has arrived near Venezuela
Is The U.S. Prepared For War With China?

Is The U.S. Prepared For War With China?

Just as before World War…

Oil Hedging Leaves Traders Dangerously Exposed

Oil Hedging Leaves Traders Dangerously Exposed

Ultra high volatility in crude…

Mexico’s Pemex Suspends Fuel Imports From U.S. As Demand Tanks

Mexico’s Pemex declared force majeure on fuel imports, which it receives from the United States, because of tanking demand, Reuters reported, citing two unnamed sources.

Bloomberg quoted another unnamed source that said there were several tankers carrying fuel from the U.S. and waiting to unload in Mexico. They were, however, unable to do so. 

According to a former employee with Pemex’s trading arm, PMI, 60 tankers are waiting off the Pacific and Atlantic coasts of Mexico, each carrying an average of 300,000 barrels of gasoline, for a total of 18 million barrels.

Demand for fuel in Mexico, however, has slumped. As a result, Pemex has opted for a force majeure declaration to avoid having to pay penalties linked to other alternatives such as suspending supply contracts or spot market purchases, the Reuters source said.

What makes the situation complicated for PMI is the fact that since last year, the company has been buying more fuel under long-term contracts rather than on the spot market, which makes it liable for more contract suspension penalties.

Bloomberg reports fuel purchases at gas stations has fallen by 50 percent amid the national lockdown that President Andres Manuel Lopez Obrador ordered. The idling of those 60 tankers was one part of the fallout of this order on the oil industry. Because of the idling, PMI has been paying the abovementioned penalties for more than a week now. The daily average of these penalties—called demurrage fees—comes in at $1.5 million, or about $25,000 per tanker, Bloomberg notes.

The problem is not confined to the Mexican side; the fuel that U.S. refiners sell to Mexico is a special blend as per the buyer’s requirements. This means that finding an alternative market for the fuel would be a difficult task.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News