Mexican state oil company Pemex is seeking markets in Asia and Europe for its crude exports following President Donald Trump's recent imposition of tariffs on Mexican goods, according to Reuters.

Trump implemented a 25% tariff on Mexican products earlier this week, while Canadian crude received a reduced 10% levy. The move has prompted Pemex to explore alternatives to the US market, which currently receives about 75% of the company's Maya heavy crude exports.

"We have been talking with others. There is appetite for Mexican crude in Europe, India, and Asia," a senior Mexican government official told Reuters on condition of anonymity. The source noted that China had expressed a particular interest in Mexican petroleum during the initial conversations.

Pemex exported an average of 806,000 barrels per day (bpd) in 2024, with 57% destined for the United States. However, January exports dropped to 532,404 bpd, a 44% year-on-year decline, coinciding with what the company described as quality issues with its crude.

Two sources from PMI, Pemex's trading arm, indicated that India, China, South Korea and Japan would be suitable alternative markets for Mexican heavy crude. One PMI source stated that "only Asia" could absorb the volume currently sent to the US, as refineries there are equipped to process this type of petroleum.

The government official firmly rejected the possibility of offering price discounts to US customers to offset the tariffs. Both government and PMI sources confirmed that once current contracts with US clients expire this month, a significant portion of Mexican crude will likely be redirected to European and Asian markets.

This sudden trade realignment presents both opportunities and significant challenges for Pemex. The logistics of redirecting crude flows to Asia involve substantially higher shipping costs and longer transit times compared to the proximity of US refineries, inevitably compressing profit margins even without offering discounts.

While Asian markets can technically process Mexican heavy crude, Pemex will be competing in a marketplace where other heavy crude producers like Venezuela, Canada, and Middle Eastern nations already have established relationships. Building new commercial partnerships takes time and often requires competitive pricing initially.

According to the US Department of Energy, Canada and Mexico together provide approximately one-quarter of the petroleum processed by American refineries. The tariffs potentially impact nearly $2.2 trillion in annual trade with America's three main commercial partners.

For the US market, the tariffs could drive up refining costs in the Gulf Coast region, where many facilities are specifically configured to process heavy Mexican crude. Finding suitable replacement volumes may prove challenging for American refiners in the short term.

The timing of these tariffs is particularly problematic given Pemex's status as the world's most indebted energy company, with outstanding debts of around $97bn in September 2024. Any reduction in export revenue could further strain the company's already precarious financial position and complicate Mexico's energy self-sufficiency ambitions.

Mexican officials nevertheless appear confident about finding alternative buyers. "We are quite calm," the government source said, "because we have alternatives." The US energy industry has not yet indicated plans to stop purchasing Mexican crude, according to the same official, who added: "I think as they see how certain or uncertain this is, they will start to react."

Pemex faces this trade disruption while already dealing with declining production from aging oil fields in the Gulf of Mexico, which has reached its lowest levels in more than four decades. The coming months will reveal whether Mexico's alternatives can truly compensate for potential losses in its historically most important market.