Pemex reported a fire at a distillate hydrotreater at the Lazaro Cardenas refinery in Minatitlan but said production was not impacted, according to an internal Pemex statement issued on May 24 seen by Platts. Within the first six months of 2023, there have been three refinery fires in Mexico, according to S&P Global. Other sources mentioned little HSFO supply tightness within the USGC market, which impacts market prices and cracks. A market participant said the USGC HSFO/Brent crack is seen strengthening in June due to Europe and Asia driving a lot of it. Data also showed HSFO exports from Mexico were last lower in June 2021, when exports to the USGC were at 1.35 million barrels, according to the data. Kpler shipping data showed about 1.95 million barrels of HSFO has been exported from Mexico to the USGC so far in June, versus about 4.09 million barrels in May.

'We were seeing a cargo a day, now we are seeing only a cargo a week ,' one USGC fuel oil trader said. Sources said that export activity from Mexico however began to slow in May and has continued to wane in June. This was the highest volume since the Energy Secretariat began tracking data in 1989. Mexico has so far has exported 249,722 b/d of fuel oil in 2023, up from 204,486 b/d in 2022. S&P Global Commodity Insights reported that Mexico's fuel oil production and exports increased in 2023 as a result of Mexican President Andres Manuel Lopez Obrador efforts to make Mexico less dependent on American petroleum products. The HSFO market in Houston for much of 2023 had been flush with supply, sources said due to lower refinery run rates for the first part of the year, as well as an increase in Mexico HSFO production and exports to the USGC. The tightness on HSFO blending components could impact the market further as the market can start to see tightness in HSFO supply. 'Components for blending are scarce and too expensive,' a source said. Not only did the HSFO flat price reached a near two year high of $64.63/b on June 27, but cracks were also supported by falling crude values as ICE Brent hit a recent low on June 27 of $72.62/b. Platts assessed the physical USGC HSFO/Brent crack on June 27 at minus $7.61/b, its highest level since it was assessed at minus $7.28/b on Sept.

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