Higher Oil Prices Let Mexico Pull Back Billions in Pemex Support

Mexico’s government has moved to sharply reduce direct financial support for state oil firm Pemex, cutting next year’s planned assistance to 81 billion pesos — roughly a 70% reduction from the current year — on the expectation that higher global oil and gas prices will leave the company with a surplus. Bloomberg reported that the administration expects Pemex to post about 95 billion pesos in cash surplus as prices have risen amid the U.S. and Israeli war against Iran.

Despite the projections, Pemex remains heavily indebted and operationally challenged. The company was the world’s most indebted firm with roughly $105 billion in mid-2025 liabilities, and while that figure had fallen to about $79 billion by the end of the first quarter, Pemex still recorded a 45.99 billion-peso net loss in Q1 of this year. The firm returned to profit in Q2, but that quarterly gain was about 69.7% smaller than the profit reported in Q2 2025, underscoring persistent underlying weaknesses.

Production and refining difficulties have compounded Pemex’s troubles: efforts to raise refining output have repeatedly run into obstacles, and crude quality problems—including high water content—have deterred some buyers. Policies have also shifted under President Sheinbaum’s administration, which has moved away from the previous government’s emphasis on exclusive state control and introduced “mixed” contract arrangements that allow Pemex to partner with private firms on development projects.

Ratings agency Moody’s has kept Pemex’s credit rating unchanged, citing expectations that the Mexican government would continue to provide substantial and timely support as it did in 2025. Still, the administration’s decision to scale back budgeted aid reflects a bet that higher prices and potential new export opportunities driven by supply disruptions in the Persian Gulf will help Pemex bolster its finances even as the company works to address deeper operational and structural issues.