Mexico's fuel demand outlook is turning uncertain as the economy shows signs of weakness under the weight of tariffs, weak job creation and declining investment. Economists warn that softer growth could slow demand for gasoline and diesel by the end of 2025, just as Pemex's Dos Bocas refinery ramps up production.
The overlap of lower demand and higher output could translate into reduced fuel imports, which are already at multi-year lows, analysts told S&P Global Commodity Insights.
Weakness ahead
Although the risks of a recession have diminished, the economy is still expected to grow less than 1% this year, so by no means is that good, said Gabriela Siller, head of economic analysis at Banco BASE.
"We've seen a 30% drop in public spending in the first half of the year and remittances are falling along with their purchasing power. There might be a rebound in job creation by the end of the year, but gross fixed investment remains weak even after a low comparison base," Siller said.
"A mild recession cannot be ruled out," said Luis Muñiz, head economist for Mexico at Vector Casa de Bolsa, noting that the economy grew by only about 0.4%-0.5% so far this year, and for the second half, the expectation is only another 0.3%-0.4%.
"The wage bill has fallen for three consecutive months, pressuring consumption," Muñiz said, adding that if it persists, the economy would require less fuels.
Demand for fuels has been weakening in 2025 when compared to 2024. In June, gasoline sales stood at 661,000 b/d, while diesel demand was 270,500 b/d, according to official data.
James Salazar, head of economic analysis at CI Banco, said the economy is showing weakness on both domestic and external fronts.
"The slowdown has been less severe than expected, but gross fixed investment has posted significant declines and there's no job creation," Salazar said, adding that spending cuts under the new administration are also weighing on activity.
"This weakness could intensify, leading to greater stagnation due to the investment slowdown and uncertainty from the tariff war," he said.
Trade uncertainty
The tariff war started by President Donald Trump is already hitting growth and investment expectations, Muñiz said.
"If you look at the trade balance, exports haven't fallen because companies frontloaded shipments in response to the erratic way tariffs were implemented. That has inflated export growth," he said.
"However, much of the impact from the tariff war is still to come," he said.
The prospect of softer fuel demand coincides with Pemex's expansion of domestic output. In June, the Dos Bocas refinery raised crude processing to 233,000 b/d, lifting total national refinery runs to 1.1 million b/d, the highest since 2015. Output is expected to continue rising in the coming months and Dos Bocas is expected to ramp up production to around 300,000 b/d, according to the government.
If demand is weaker, Pemex would have less need for imports, which are already at multiyear lows.
In June, Mexico imported roughly 235,000 b/d of gasoline and 87,000 b/d of diesel, down from 420,000 b/d and 200,000 b/d, respectively, in June 2024.
Source: Platts