Mexico’s diesel prices to rise on Russian export ban

Considering Russia's temporary restrictions on petrol and diesel exports, which are expected to severely constrict the global fuel supply, Mexico's retail diesel prices could increase in October.

In response to a shortage of domestic motor fuel, the Russian government issued an indefinite export ban on diesel and petrol last week.

Although some merchants anticipate the embargo to be lifted in the next weeks, certain nations that import Russian diesel may need to look for alternatives in the US, from where Mexico gets the majority of its imports.

According to US Energy Information Administration (EIA) data, US diesel reserves through the first three weeks of September were at the second-lowest average level for that span in 22 years, at 120.3mn litres, as a result of reduced imports and recent increases in local demand.

According to prices recorded by fuel retailers to the energy regulatory body (CRE) and monitored by Argus, diesel retail prices in Mexico reached their highest point this year, averaging Ps24.11/l ($5.20/USG) so far in September.

Based on Argus evaluations, supplied diesel prices to Mexico's east increased to their highest level of the year, $3.15/USG, on average so far in September, which contributed to the price increase.

Russian refiners are expected to meet contracts after the export embargo, but market participants say the Russian government has the right to make revisions at any time.