Commodities
Analysis-Can Mexico’s Sheinbaum, a climate scientist, shake Lopez Obrador’s oil legacy?
By Cassandra Garrison
MEXICO CITY (Reuters) – Mexico’s President-elect Claudia Sheinbaum, an accomplished climate scientist, could struggle to fulfill her environmental pledges after she sailed to victory, in part, on the popularity of a predecessor who doubled down on fossil fuels.
Sheinbaum, elected as Mexico’s first woman president by a sweeping margin Sunday, inherits a country grappling daily with climate change and environmental challenges: pervasive drought, a water crisis in the sprawling capital of Mexico City, and rampant deforestation.
The 61-year-old leftist leader, who was part of a United Nations panel of climate scientists that received a Nobel Peace Prize in 2007, has spoken about her belief in an academic and scientific approach to politics. She campaigned on a pledge to significantly boost renewable energy in the oil-producing country to as much as 50% by the end of her term in 2030.
But despite her best intentions to improve Mexico’s green record, Sheinbaum’s mentor, the highly popular outgoing President Andres Manuel Lopez Obrador, spent billions propping up Mexico’s fossil fuel-dependent state energy giants, oil firm Pemex and power utility CFE.
Her overwhelming victory – and the possible congressional super majority won by the ruling coalition – is in many ways a referendum on Lopez Obrador’s policies and initiatives, said Mariana Campero, senior associate with the CSIS Americas Program.
Sheinbaum could be hard-pressed to break cadence with Lopez Obrador’s style at the risk of losing support, limiting her ability to prioritize climate change policies.
“She has said repeatedly that she will continue with his policies and that her government will be a continuation of his government,” said Campero. “But she has always said that green energy is important.. So how will she square that circle?”
GREEN AT HEART?
Sheinbaum has credited her upbringing by a chemical engineer father and cellular biologist mother for fostering her interest in science and politics. She has a doctorate in energy engineering from the National Autonomous University of Mexico.
As mayor of Mexico City, she installed a roof-top solar project at a busy central market and inaugurated a 100% electric bus line.
But she faced criticism for some projects, including the construction of a bridge in the Xochimilco ecological zone that community members said damaged wetlands. She also supports some of Lopez Obrador’s most controversial projects, including the Mayan Train, a tourist railway that activists and scientists decry for endangering pristine wilderness and ancient cave systems beneath the jungle floor.
Still, her rise to the presidency has fueled hope among some that she could turn things around for the country’s track record on climate change policies, which deteriorated under Lopez Obrador, according to the Climate Change Performance Index, largely due to increased subsidies for fossil fuels and poor progress in curbing deforestation.
“I definitely think that she has that will and intention to put Mexico back on net-zero targets and in the good graces of the international community,” Arthur Deakin, director of energy at consultancy America’s Market Intelligence.
THE PEMEX PROBLEM
Sheinbaum has pledged to boost wind and solar energy as part of a $13.57 billion investment in new energy generation projects. She is, however, also facing the biggest budget deficit in decades, left behind by Lopez Obrador, a reality that will force her to pick and choose how to dedicate spending.
Despite being the world’s most indebted energy company, Pemex is still a major contributor to state coffers, said Alejandra Lopez, a public policy consultant who specializes in energy issues.
The firm is a heavy emitter of greenhouse gases, but it is also an important national symbol of energy sovereignty for many Mexicans, including Lopez Obrador.
Pemex stirs a sense of “emotional, historical and sentimental” importance within the country, Lopez said.
Sheinbaum is a vocal believer in the role of the state in Mexico’s energy sector, long dominated by Pemex, which could make it tough to keep her promise to increase renewable energy.
A business-savvy approach could enable her to attract investment and spur realistic change towards decarbonizing the energy and transportation sectors, Deakin said.
Sheinbaum could start by increasing the limit for Distributed Generation (DG) projects, typically small privately-funded solar or wind farms that are built to supply energy to a specific factory or industrial site.
Upping the cap from the current 0.5 megawatts to 5 megawatts, like Brazil has done, could increase clean electricity for commercial industrial users, Deakin said. She could introduce biofuel policies and increase electric vehicle (EV) subsidies and charging infrastructure. A national carbon credit framework could help accelerate interest in low carbon initiatives.
“It’s a little harder when you’re struggling with a more constrained budget, but there’s other ways that emerging markets are able to create a more attractive environment for renewable electricity,” Deakin said.
By Arunima Kumar
(Reuters) -Oil prices paused their rally on Tuesday, but remained near four-month highs, with the market’s attention focused on the impact of new U.S. sanctions on Russian oil exports to key buyers India and China.
futures slipped 54 cents, or 0.67%, to $80.47 a barrel by 1033 GMT, while U.S. West Texas Intermediate (WTI) crude fell 53 cents, or 0.67% to $78.29 a barrel.
Prices jumped 2% on Monday after the U.S. Treasury Department on Friday imposed sanctions on Gazprom (MCX:) Neft and Surgutneftegas as well as 183 vessels that transport oil as part of Russia’s so-called “shadow fleet” of tankers.
“With several nations seeking alternative fuel supplies in order to adapt to the sanctions, there may be more advances in store, even if prices correct a bit lower should tomorrow’s U.S. CPI data come in somewhat hotter-than-expected”, said Charalampos Pissouros, senior investment analyst at brokerage XM.
The U.S. producer price index (PPI) will be released today, followed by the consumer price index (CPI) on Wednesday.
A core inflation rise above the 0.2% forecast could lower the likelihood of further Federal Reserve rate cuts, which typically support economic growth and could boost oil demand. [MKTS/GLOB]
While analysts were still expecting a significant price impact on Russian oil supplies from the fresh sanctions, their effect on the physical market could be less pronounced than what the affected volumes might suggest.
ING analysts estimated the new sanctions had the potential to erase the entire 700,000 barrel-per-day surplus they had forecast for this year, but said the real impact could be lower.
“The actual reduction in flows will likely be less, as Russia and buyers find ways around these sanctions,” they said in a note.
Nevertheless, analysts expect less of an supply overhang in the market as a result.
“We anticipate that the latest round of sanctions are more likely to move the market closer to balance this year, with less pressure on demand growth to achieve this,” said Panmure Liberum analyst Ashley Kelty.
Uncertainty about demand from major buyer China could blunt the impact of the tighter supply. China’s imports fell in 2024 for the first time in two decades outside of the COVID-19 pandemic, official data showed on Monday.
By Arathy Somasekhar
HOUSTON (Reuters) – Peru’s niche Bretaña is gaining popularity in the United States, with the first cargo discharging in the U.S. Gulf Coast this month as U.S. refiners seek alternatives for declining Mexican heavy crude.
Bretaña, a rare heavy sweet crude with minimal metals, is produced in the Peruvian side of the Amazon (NASDAQ:) rainforest. It is then barged along the Amazon river and loaded onto larger ships that depart from Brazil.
The vessel Radiant Pride transported about 300,000 barrels of Bretaña from Manaus, on the banks of the Negro river in Brazil, and discharged on Jan. 2 in Houston, ship tracking data from Kpler and LSEG showed.
The cargo was bought by oil major Shell (LON:), a source said. Shell declined to comment.
“Given the drop in heavy sour crude from Mexico to the U.S. Gulf Coast over the last year, we are starting to see new heavy grades being pulled in to backfill this loss – this is a trend we only expect to continue,” said Matt Smith, an analyst at Kpler.
U.S. imports from Mexico fell to their lowest on record in 2024 as the Latin American country’s oil production fell and a larger portion of output remained at home to be refined.
Two cargoes of Peru’s Bretaña, a relatively new entrant into the market since production began in 2018, discharged at the U.S. West Coast last year – one at Marathon Petroleum (NYSE:) and another at PBF Energy (NYSE:) terminals, the Kpler data showed.
Marathon Petroleum declined to comment. PBF Energy did not immediately reply to a request for comment.
PetroTal Corp, the producer of Block 95 where the Bretaña oilfield is located, bought the assets from Canadian producer Gran Tierra Energy (NYSE:) in 2017, and currently produces about 20,000 barrels of oil per day, according to Chief Executive Officer Manuel Zúñiga.
Challenges with transporting the crude via a pipeline operated by Peru’s state oil firm Petroperu led to a brief halt in exports between 2022 and 2024, Zúñiga said.
Petroperu has struggled in recent years to keep the line operational amid spills and social conflict interrupting its flow.
Three cargoes of Bretaña headed to the U.S. West Coast and one to the U.S. East Coast between 2020 and 2022, Kpler data showed.
About 90% of the Bretaña crude produced by PetroTal is exported, and the remaining is transported by barges to Petroperu’s refinery in Iquitos, Zúñiga said.
PetroTal has a contract with Houston-based Novum Energy under which Novum buys the crude for export and arranges its transportation, Zúñiga added.
Novum did not immediately respond to a request for comment.
While PetroTal hopes to increase production, permitting delays as well as reliance on barges are a current limitation, Zúñiga said.
“You need access to the pipeline,” Zúñiga said, adding that the company is working to secure use of the infrastructure.
Petroperu said last year that it would hold negotiations with producers in the Peruvian jungle so that they can use the pipeline with a fair rate to help cover operational costs.
Investing.com — The future of is unclear due to the anticipated strengthening of the dollar, impending tariffs, and a potential slowdown in the energy transition under the incoming administration of President-elect Donald Trump, according to analysts at BMI, cited by Wall Street Journal.
They point out that even though copper is likely to prosper due to environmental-driven sentiment, the risks associated with their relatively optimistic perspective are leaning towards the negative side.
In a note, the BMI analysts stated, “While we still expect that copper will continue to thrive due to climate-driven sentiment, we note that the balance of risks to our relatively bullish outlook is tilted to the downside.” They do not anticipate a substantial increase in metals demand from the Chinese construction industry.
Nonetheless, they suggest that enhanced industrial activity and growth, driven by government stimulus, could be enough to elevate prices. As of now, the London Metal Exchange (LME) three-month copper is trading 0.6% higher at $9,153 per metric ton.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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