Despite international—and national—condemnation against the Russian invasion of Ukraine, President Andres Manuel Lopez Obrador has declared that Mexico will not impose any direct economic sanctions on Russia.
AMLO says he wants to have good relations with “all the governments in the world.” Moreover, the day after the U.S. administration imposed sanctions on Russian oil imports and began important diplomatic efforts to find substitutes from other producers around the world, the Mexican president reiterated his commitment not to increase national production to more than two million barrels a day, and re-emphasized his government’s commitment to ensure that “reserves are not depleted for future generations to enjoy.”
Mexico’s oil production has been in decline for several years, with 1.9 million barrels a day in 2020. But Mexico still ranks as a major producer and is the second-largest source of U.S. crude oil imports, behind Canada. In 2020, the United States imported over 240 million barrels of Mexico’s heavy crude, or 9.8% of all crude oil imports. Russia’s crude accounted for about 3% of the nation’s imports before the Biden administration banned it from U.S. ports.
According to the U.S. Energy Information Administration, if a 2013 energy reform started by AMLO’s predecessor—which AMLO has been trying to reverse since he took office—had been successfully implemented, Mexico´s oil production could have stabilized at 2.9 million barrels per day through 2020 and increase 75% by 2040. That is, Mexico could be producing one million extra barrels a day. That amount would come in handy as U.S. officials struggle to stabilize global energy markets.
Three years into his administration, AMLO has been able to de facto reverse the energy reform, as well as the free-market policies of the last four decades, with very little resistance from either the Mexican opposition or the U.S. government.
His proposed counter-energy reform, which is currently being discussed in the Mexican Congress, will give state-owned enterprises the leading role in all segments of the oil, gas, and electricity markets. It would also reserve lithium extraction for the state and do away with energy regulators.
According to the ratings agency Moody’s, the government needed to invest an additional $15 billion into Pemex, the state owned enterprise, last year to maintain production at its current, historically-low levels. Private production was 45% short of its target goal of 166,000 daily barrels by the end of last year.