South of the Border Swap (February 20, 2015)
The Potential Impact of a US - Mexican Oil Exchange
As geographical neighbors, the United States and Mexico have a long and mutually beneficial energy relationship. For many years, Mexico has been one of the top suppliers of crude oil to the US, which has reciprocated by sending significant volumes of refined products to Mexico. Mexico is also the largest net importer of US natural gas. Both countries are now exploring ways to further increase their ties. PEMEX, Mexico’s state oil company, has applied for a swap transaction that would involve importing heavy Mexican oil into the US in exchange for equivalent volumes of light US crude oil. What is the background of this proposal and how would it impact the crude oil and petroleum shipping markets in the Caribbean and beyond if it was approved?