Proposed US tariffs on Mexican goods would raise US costs for Mexican high-sulphur fuel oil (HSFO), potentially shifting flows of the country's marine fuel to the Central American bunkering hub of Panama.
US president Donald Trump has said he will impose 25pc import tariffs on goods from Mexico. US oil companies are asking Trump to exclude oil from tariffs, but it is unclear whether Trump will oblige.
Mexico's residual fuel oil exports reached a record high of 218,059 b/d in the first 10 months of 2024, according to data from Mexican state-owned Pemex. The US took most of Mexico's residual fuel oil exports during that period, importing 145,830 b/d from its neighbor, including 124,341 b/d that went to the US Gulf coast, according to US Energy Information Administration data.
Should Trump implement the 25pc tariffs, companies bringing Mexican residual fuel oil to the US could reduce bids in effort to recoup their tariff costs. But lower bids could prompt Mexican exporters to redirect some of residual fuel oil to buyers in Panama, northwest Europe and Singapore.
If the price makes sense, Panama bunker suppliers could displace some of their US Gulf coast import barrels with Mexican barrels, as Panama suppliers "are constantly out there hunting for the best price available in the international market", a Panama supplier told Argus.
Panama's HSFO bunker demand averaged 25,466 b/d (1.19mn t) in January-October 2024. The country does not have an operational refinery and is dependent on imports for all its oil product needs. Panama received the bulk of its residual fuel oil shipments from Mexico, the US Gulf coast and Peru, according to ship tracking data from Vortexa.
Trump has also promised unspecified actions to take control of the US-built Panama Canal in response to what he says has been unfair treatment of US ships, a claim that Panama president Jose Raul Mulino has rejected.
