By Stephen Eisenhammer and Shariq Khan
MEXICO CITY (Reuters) -Mexico’s President Claudia Sheinbaum said on Thursday that U.S. individuals are involved in smuggling fuel into the country, following a Reuters investigation into the illicit trade that showed how narcos have penetrated the North American energy sector.
“Yes, there are U.S. business people in the cases under investigation,” Sheinbaum said during her regular morning press conference in response to a question about the Reuters report. “One cannot explain otherwise how fuel comes from the U.S. to Mexico and enters illegally.”
The Reuters investigation, published on Wednesday, uncovered the role of a Houston company, Ikon Midstream, in delivering diesel to Mexico and declaring the cargo as lubricants – a product exempt from the steep import duty levied on diesel and gasoline.
Ikon Midstream and its executive director, Rhett Kenagy, declined to comment for the story through their lawyer.
Sheinbaum said she did not know if Ikon Midstream was part of Mexican investigations related to alleged fuel smuggling. But two Mexican security sources told Reuters that a tanker delivery by Ikon Midstream of diesel to Mexico in March is part of a probe into the illicit trade.
The White House did not immediately respond to questions about Sheinbaum’s comments.
The fuel smuggling scheme largely boils down to a lucrative tax dodge. Mexico slaps a levy known as IEPS on a wide variety of goods, including imported diesel and gasoline. Crooks evade the tax, charged by the liter and often costing upwards of 50% of the cargo’s value, by declaring the foreign fuel to be some other type of petroleum product that’s exempt from the duty.
The Jalisco New Generation Cartel, one of Mexico’s most powerful and violent, is the unquestioned leader in fuel and crude oil smuggling and the only cartel using tankers, according to Mexican and U.S. security sources.
MEXICAN CRACKDOWN
Sheinbaum, who has made combating the illicit trade a cornerstone of her security strategy, said on Thursday that illegal imports have dropped as a result of her government’s crackdown, adding that this was being reflected in higher sales of legal fuel.
Since Sheinbaum took office in October 2024, authorities say they’ve seized around 500,000 barrels of allegedly illegal fuel and crude oil – more than the previous government nabbed over its whole six-year term.
That’s only a trickle in the torrent of bootleg fuel entering the country, Reuters found, with illegal imports accounting for as much as one third of Mexico’s diesel and gasoline market, according to five current and former Mexican government sources.
Sheinbaum said U.S. authorities are investigating the issue, without providing details.
Since September 2024, the U.S. Department of the Treasury’s Office of Foreign Assets Control has issued two rounds of sanctions against a dozen Mexican nationals and nearly 30 Mexican companies allegedly linked to CJNG and its fuel theft and smuggling operations.
In May, a father and son from Utah – James Lael Jensen and Maxwell Sterling Jensen – were charged with conspiracy to commit money laundering and provide material support to a designated foreign terrorist organization. Authorities allege the Jensens worked with CJNG to smuggle crude oil into the United States.
Lawyers for James Jensen did not respond to a request for comment for the Reuters investigation. Robert Guerra, a lawyer representing Maxwell Jensen, declined to comment.
U.S. officials also met with refiners in the Houston area this year to explain the involvement of Mexican organized crime in the fuel business and to stress the importance of knowing their suppliers and customers, three industry sources and a U.S. official said. That official told Reuters that violators of U.S. sanctions up and down the supply chain could face civil and criminal penalties.
(Reporting by Stephen Eisenhammer in Mexico City and Shariq Khan in New York.Additional reporting by Raul Cortes in Mexico City.Editing by Marla Dickerson.)
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