Mexico Resumes Retail Tax Relief for Diesel for First Time in Nearly a Year as Fuel Prices Soar

Mexico’s Finance Ministry late Friday said it would reduce retail taxes on diesel fuel this week for the first time in nearly a year.

The decision followed sharp increases in the cost of imported diesel as the conflict in the Middle East continues following U.S. and Israeli attacks against Iran in late February.

The government said diesel buyers will pay a special tax on fuels, or IEPS, of 4.771 pesos/liter (26cts/liter), down from 7.3634 pesos/liter last week.

The average landed spot price of the U.S. Gulf Coast ULSD on Mexico’s East Coast averaged 16.355 pesos/liter last week, up nearly 10.4% from 14.819 pesos/liter in the previous week and 58.5% above the comparable week in 2025.

Spot ULSD prices in Mexico were at 17.982 pesos/liter, the highest level since Nov. 7, 2022, when the Russia’s war against Ukraine led to sharply volatile prices.

Industry analyst Ramses Pech said he expects retail diesel prices rise by 80 centavos to 1 peso/liter this week, pushing the average retail price to nearly 29 pesos/liter.

He said the projections assumes retailers will aim to maintain profit margins of about 2.19 pesos/liter to “recover losses incurred last week.”

When the lower tax rate on diesel took effect on Saturday, the national average retail price for the fuel was at 27.99 pesos/liter, leaving retailers with an average margin of 1.41 pesos/liter, he said, based on information compiled by consumer protection agency Profeco.

“Although there is compensation from the lower IEPS charge, there is also a drop of at least 30 centavos in profit margins,” Pech said.

Mexican President Claudia Sheinbaum last week she had reached a deal with most of the country’s largest retailers to extend for another six months a voluntary 24-peso/liter cap on the retail price of regular gasoline.

Reporting by José Luis Adriano, jadriano@opisnet.com; Editing by Karla Omaña, komana@opisnet.com and Jeffrey Barber, jbarber@opisnet.com