Mexico's $3B Cuba Oil Deal Signals Rising Investor Risk

Edgen Stock·Jan 12 2026, 07:13

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Key Takeaways

Recent actions by President Claudia Sheinbaum's administration are increasing political and economic uncertainty for investors in Mexico. Key indicators include a massive, off-the-books oil shipment to Cuba and the consolidation of state power over key infrastructure and judicial institutions, raising concerns about the rule of law and compliance with the USMCA trade agreement.

State oil company Pemex sent $3 billion in crude oil to Cuba between May and August, a figure three times higher than officially disclosed amounts from the previous two years.
A fatal train derailment on December 28 highlighted risks in major infrastructure projects, which are now controlled by the military under opaque, no-bid contracts.
The ruling Morena party has systematically weakened independent institutions, including the judiciary and electoral bodies, heightening long-term risks for foreign investment and trade.

Pemex Sends $3B in Crude Oil to Cuba

A report from the non-governmental organization Mexicans Against Corruption and Impunity revealed that a subsidiary of the state-owned oil company, Pemex, sent $3 billion worth of crude oil to Cuba between May and August. This amount is triple the total volume Pemex reported sending to the island over the last two years of the prior administration. The shipments, along with payments of approximately $5,500 per month for each of 3,100 Cuban medical personnel in Mexico, signal a sharp ideological pivot that redirects national resources away from market-driven objectives.

Military Control Precedes Fatal December 28 Derailment

The administration's strategy of consolidating power is evident in its handling of major infrastructure. The military has been granted control as general contractor for key projects, including the Interoceanic Corridor of the Isthmus of Tehuantepec. A train on this recently modernized railway, inaugurated in December 2023, derailed on December 28, killing 13 people and injuring over 100. Contracts for the project were awarded to the navy on a no-bid basis and have been classified as state secrets, fueling concerns about corruption and a lack of oversight that directly impact operational safety and project viability.

Eroding Judiciary Threatens USMCA Compliance

The government's power consolidation accelerated after the June 2024 elections, where the ruling Morena party secured a super-majority in the lower house with the help of a loyalist electoral tribunal. President Sheinbaum subsequently pushed through reforms that created a popularly elected judiciary, effectively ending its independence. This erosion of institutional checks and balances poses a direct threat to the U.S.-Mexico-Canada Agreement (USMCA), which relies on a predictable legal framework to protect investors and enforce fair competition. The dismantling of regulatory bodies and the Supreme Court's independence leaves the USMCA as one of the last remaining bulwarks against rising political risk.