Secret routes smuggling fuel from the US into Mexico

Crime networks

Major crime networks, some with connections to drug cartels, are conducting organized operations to smuggle vast amounts of gasoline and diesel from the United States into Mexico.

Largest black market in the world

The smuggling operation is so vast that it amounts to one of the largest black markets in the world, according to researchers investigating the topic. The numbers paint a detailed picture: up to 27% of all Mexican fuel is stolen, equating to up to 290,000 barrels per day.

Revenue source for cartels

While oil companies aren’t exactly strapped for cash, the key issue is that this illicit trade is funding cartel activities. According to the US Treasury’s Office of Foreign Asset Control, illicit fuel is the biggest revenue source for cartels outside of drugs.

Authorities attempting to control the issue

Mexico’s President Claudia Sheinbaum (pictured) is focusing on stopping the import of illegal fuel, but the extensive network, which includes the use of authorities, makes the challenge extreme.

Exporting drugs

Illicit trade is not limited to fuel. Of course, drug cartels are also exporting drugs around the world to make their money, but there are a number of other markets at play. According to the Financial Times, avocados and Wi-Fi make the list, too.

Illegal consumption points

According to the Mexican Association of Service Station Providers, for every petrol station, there are 1.6 illegal consumption points. This amounts to approximately 22,000 illicit petrol stations.

Source of theft

The state-owned petroleum company, Pemex, has been a key source for cartels. Approximately 17,000 barrels of fuel were stolen every day from Pemex in 2024, amounting to about US$1.1 billion in profits.

Nuevo León and Zacatecas

According to Mexican analytics company FuelPricing, over 40% of all fuel consumed in Nuevo León and Zacatecas in the first half of 2025 was contraband. 

Texas as a source

So, where in the US is the fuel coming from? Data shows that the majority of the illicit imports are coming from Texas. Smugglers manage this through falsified documents and corruption in the authorities.

IEPS

The Mexican government applies a tax on fuel imports called IEPS. This isn’t a fixed tax rate, as it depends on the worldwide fuel price. Therefore, the tax rate is constantly dynamic.

Revenue source

The purpose of this dynamic IEPS rate is to essentially stabilize fuel prices to ensure there’s an equilibrium between revenue and a rather volatile international rate. This revenue is especially useful for the Mexican government.

Sea transportation

Mexico is a huge consumer of fuel, and its needs are so high that transportation via land is not the most effective way to meet those needs. Therefore, the nation relies heavily on sea transportation.

Industrial lubricants

Via land, smugglers falsely declare the fuel as industrial lubricants, which aren’t subjected to the IEPS tax.

Cosmic Glory

In fact, the import of industrial lubricants and additives has experienced a major uptick. For example, records show that Cosmic Glory, a ship owned by the Chinese Bank of Communications, reported that it was carrying “additives for lubricant oils.”

At least 11 other ships

According to an investigation on the matter, there are at least another 11 cases in which ships that were documented to be loaded with diesel later report to be carrying some sort of industrial lubricant.