Sheinbaum Asks Retailers to Forgo Diesel Price Increases after Government Trims Fuel Taxes

Mexican President Claudia Sheinbaum on Thursday urged fuel retailers to refrain from raising the retail price of diesel, citing a recent reduction in federal taxes on the fuel as oil prices surge on the continuing Middle East conflict.

Sheinbaum said the government reduced the special tax on fuels, or IEPS, for diesel to 2.8129 pesos per liter (15cts/liter) this week, from 4.771 pesos/liter in the previous week. While the move was designed to limit higher prices for drivers, some retailers are charging more than 30 pesos/liter, she added.

Although Sheinbaum said a “voluntary agreement” to keep diesel prices in check remains in place, market participants said the announcement was “more of a warning signal.” The added that while there were meetings on the issue this week between the government and fuel suppliers, no agreement was reached.

The president said she told retailers that the average diesel price in Mexico of about 28.5 pesos/liter, “is still very high.”

One market participant suggested that the recent increase in retail diesel prices came as retailers drew down lower-cost inventories and are now replacing them with higher-priced fuel.

Since the U.S. and Israel attacked Iran in late February, the average landed spot price of the U.S. Gulf Coast ULSD on Mexico’s East Coast has climbed sharply. It reached a high of 19.219 pesos/liter on March 19, up 84.5% from a month ago and 74% above the year-ago average price.

Spot ULSD prices averaged 15.861 pesos/liter from Feb. 25 to Wednesday, compared with 11.278 pesos/liter over the same period of 2025.

One large fuel distributor said the reduction in the retail diesel tax, along with some lower rack prices, has helped to limit retail prices increases, while adding that Pemex price changes have lagged behind those in the international market.

The source added that there is still room to remain competitive with Pemex, except for regular gasoline.

The Mexican government earlier this month renewed a nearly yearlong voluntary agreement with retailers to cap the pump price of regular gasoline at 24 pesos/liter.

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