Mexico City — Mexico slashed oil prices to an average of $15 a barrel on Friday, attempting to defend its shrinking market share in a world swimming pool in overproduction.
It was the second price cut in two weeks by one of the largest suppliers of crude to the United States and was bound to aggravate Mexico's problems in prepaying its staggering $96-billion foreign debt.
The move announced by the state-run oil monopoly Pemex also intensified a struggle between the 13-member Organization of petroleum Exporting Countries and non-OPEC members, such as Mexico. The completion has halved the price of a 42-gallon barrel of oil in the past three months.
Rich OPEC nations have sharply increased production to retain their market share, and the response by non-OPEC competitors has produced a glut in which those with the highes prices are losing customers.
"This measure forms part of the efforts that Mexico is carrying out to stay competitive, making adequate its mechanisms of foreign commerce for crude oil to the characteristics that the market demands," a Pemex statement said.
Pemex had slashed prices $4 a barrel on Jan. 31 setting the average price at $19.75 a barrel. The reduction was retroactive to Jan. 1. Mexico sets different prices for its oil by geographical area.
The new prices are retroactive to Feb. 1 and cover sales during the first half of February.
For U.S. customers, the new price is 416 for a barrel of light Isthmus crude and $13.40 a barrel for the heavy Maya brand. The January prices had been $21.70 a barrel and $19.50 a barrel.
Mexico has a export target of 1.5 million barrels a day. But the recent turmoil in the world market has sent that level tumbling to an average of as low as 1 million barrels a day because the number of customers has dropped January's daily average was 1.2 million barrels a day.
In another development, traders and brokers in London reported that the spot market for crude oil is facing turmoil as several tracking companies have threatened default to avoid huge losses suffered during the recent dive in world prices.
While only a handful of firms are involved at the moment, the ripple effect could hit almost every trader involved in the highly speculative market for Britain's North Sea Brent grade, the traders and brokers said. "The situation is very grave," said on trader
Several firms had warned clients they could not meet obligations on sales or purchases of Brent, struck some time ago when prices had been anything up to twice present levels.
Prices for Brent cargoes loading in April were at about $16.45 a barrel Friday, up 60 cents from Thursday but about $13 below levels seen in November.