Mexico: Falling oil could greatly worsen recession

MEXICO CITY

Mexico is the third-largest oil supplier to the United States but its reserves are drying up, and Petroleos Mexicanos has been slow to explore deep-water deposits.

Even with the declines in output, oil revenues funded 40 percent of Mexico’s budget last year. The government protected oil income this year by hedging prices at $70 a barrel. But those guarantees aren’t in place for 2010, Carstens said. He forecast 2010 export prices of $53 a barrel.

AP