Mexican Cartel Oil Theft and Smuggling Schemes Uncovered: Assessing the Scope and Addressing the Problem

    Last September, I wrote about Oil Theft by Cross-Border Criminal Gangs in the Permian Basin. Now, more is known about networks, techniques, and strategies used by the cartels to operate their criminal enterprise of oil theft and smuggling. While oil is still being stolen from operations in West Texas, the majority of operations seem to involve stealing oil from PEMEX’s pipelines and tanks in Mexico and trucking it to the U.S. for sale to U.S. collaborators.

     The Mexican cartels have been involved in oil smuggling for some time. The oldest article I found about it was from 2009, but it was done before then. A 2018 article by Reuters details cartels forcing PEMEX refinery workers to help them steal oil, under threat of physical harm. They wrote then:

“Fuel theft is fast becoming one of Mexico’s most pressing economic and security dilemmas, sapping more than $1 billion in annual revenue from state coffers, terrorizing workers and deterring private investment in aging refineries that the government, following a 2014 energy reform, hoped instead would be thriving with foreign capital.”

     Reuters reported that between 2011 and 2016, fuel line taps quadrupled. There were taps about a mile apart all over these pipeline systems. Mexican refineries had already been degraded with a lack of maintenance. This has contributed to huge losses for PEMEX.

“Using the habitual narco offer of “plata or plomo,” or “silver or lead,” gangs extort refinery workers into providing crucial information. Their tactics, coupled with fighting between groups jockeying for access to the racket, have led to a surge of violence in cities like Salamanca, home to a third of the fuel taps discovered in Mexico in 2016.”

Refinery workers and many others have been murdered and their corpses displayed for fear factor purposes. It is a gruesome example of the power of organized crime in the country. By forcing qualified people to help them steal oil by threat of physical harm, the cartels are able to limit the number of explosions and accidents, although there are some.  

     A 2021 paper in the journal Global Crime applied crime analysis techniques to characterize oil theft in Mexico. As the abstract below notes, there is significant violence associated with this activity, support from local citizens and businesses (some no doubt forced but others may choose to be complicit or quiet and have benefited as well), damage to the environment, and damage to the socio-economic system itself. 

     I have never been to Mexico, but some areas seem to be run like a Mafia state by the cartels. I tend to agree with some of the more conservative positions that call for the cartels to be rooted out, which will probably require military intervention by the Mexican government, with help from the American government. I think we can accurately call the cartels terrorists, and terrorism is something we should eliminate and not tolerate. They are narco-terrorists, but they run sophisticated organized crime rings. While oil theft is a problem around the world, such as in Nigeria. In Mexico, it fuels the coffers of the cartels, keeping their influence strong. It most often takes place in regions where the rule of law is poorly established. Oil theft is much less risky than smuggling narcotics. I should note that oil theft also includes gasoline theft or theft of other refined oil products. The map below shows the degree and locations of pipeline tapping. The first table below shows the methodologies of the criminals, and the second table shows methods to deter these crimes.  

     According to a March 2025 analysis by the Atlas Institute of International Affairs, the Sinaloa Cartel and the Jalisco New Generation Cartel (CJNG), along with other domestic criminal syndicates, control oil theft. When Mexican President Andrés Manuel López Obrador (AMLO) deployed the Mexican military to guard pipelines, oil theft declined. However, the cartels adapted by hijacking fuel trucks and bribing PEMEX employees. Deploying the military did lead to increases in sales revenue for PEMEX in 2022. There were 14,910 fuel thefts and 12,591 illegal taps in 2018, as documented by researchers.

“Advanced security technologies like pipeline surveillance solutions, artificial intelligence-based monitoring technology, and bulletproof fuel transportation are increasingly required and have been shown to be effective (Singh Kadam, 2023). Security companies specialising in energy infrastructure are increasingly finding investment opportunities within the Mexican market, driven by the need to safeguard assets and ensure continuity. Investments in the modernisation of energy infrastructure (such as constructing underground pipelines, establishing secure fuel storage facilities, and installing electronic monitoring systems) can significantly reduce the risk of theft and enhance efficiency. Furthermore, coordination between Mexico and the United States, such as the Mérida Initiative introduced in 2017, could provide a strategic advantage in combating fuel theft (Congressional Research Service, 2017). Bilateral collaboration initiatives targeting cartel financial networks can improve energy firms’ supply chain security, leveraging the resources and knowledge base of the combined entities to address this cross-border threat.”

     The cartels adapt by trying different things.

“Their evolving tactics include cyberattacks on PEMEX’s supply chain networks (Berg and Ziemer, 2021) and corruption within PEMEX and local government agencies (Torres, 2024), which complicates efforts to secure the energy supply chain and corporate interests.”

     The U.S. government designates and sanctions these Mexican cartels as Foreign Terrorist Organizations (FTOs). I agree with the current Treasury Department that these terrorists need to have maximum pressure put on them. Aside from pipeline tapping and hijacking trucks, they disguise trucks by misrepresenting their content as waste oil or other hazardous materials to avoid detection. Crude oil is also smuggled into the U.S. with the help of U.S. collaborators and cartel members and associates living in the U.S. Oil companies operating especially in South Texas near the border should have processes in place to prevent oil theft and illegal oil deliveries.

     Oil products like diesel have also been brought to sale on the global market. In March 2025, the Mexican navy seized 17 million liters (about 107,000 barrels) of diesel from two sites in Baja California. The stolen oil was set to be delivered on the black market via a Singapore-flagged ship.  

     An article in Tank Transport notes that people working with oil and oil product transfers in the U.S. need to be aware of the origin of the products they are delivering.

“…honest businesses risk reputational damage if they inadvertently handle contraband fuel. Tank truck operators, maritime shippers, and onshore storage facilities all grapple with stricter due diligence to avoid inadvertently enabling criminal groups. Moreover, any indication of non-compliance can result in significant penalties, government scrutiny, or even asset forfeiture.”

     The article also notes that with new regulations to stem the flow of stolen and smuggled oil, legitimate companies will also be inconvenienced, but they are willing to undergo that inconvenience to stop these criminal enterprises. Longer wait times and stricter compliance checks are likely. Barge operators, pipeline logistics firms, and tank truck carriers may face more frequent reviews of cargo manifests.

     In the most recent case in the U.S., Utah’s James Jensen and his son Maxwell, owners of Arroyo Terminals, allegedly trafficked 2,900 shipments of stolen crude oil into the U.S. worth about $300 million. Money laundering was also involved. Many of these shipments came to the terminal’s strategic location via barge from Mexico. There is a likely link to cartel jalisco nueva generacion (CJNG). With the involvement of the Jalisco cartel, the charges now include conspiracy to provide material support to a terrorist organization.

     The Tank Transport article recommends the following to limit inadvertent participation in oil smuggling:

“Falsified documentation remains one of the most common tactics in Illegal Crude Oil Smuggling. Implementing multi-layer verification—where operators compare paperwork against actual cargo samples, shipping routes, and official Pemex export permits—can reduce the chances of inadvertently handling contraband.”

“Technological solutions, including digital tracking software or blockchain-based ledgers, help record each step of the supply chain. These emerging tools can confirm product origin and authenticity, ensuring that cargo documents match physical inventories. Coupled with staff training on red flags—such as sudden changes in declared product types or unusual payment structures—operators can proactively safeguard themselves.”

     James Jenson’s mansion in Utah shows that crime pays, at least until you are caught. He and his son are now facing up to 20 years in prison. This is another case of Mexican cartels committing crimes on U.S. territory. Hopefully, the U.S. can work with Mexico to diminish the power of the cartels and eliminate them as soon as possible for the benefit of all.

    

     Apparently, Jenson had been accused of oil theft back in 2011 but was never charged. According to the New York Post:

"In that case, James Jensen was sued by a Mexican government-owned oil company for allegedly traveling to Mexico to buy fuel from cartels. Jensen denied all wrongdoing and that case was dropped two years later."

References:

 

How Mexico’s Cartels Hijacked Crude Oil & the U.S. Clocked it: The latest sanctions are part of a growing U.S. strategy to not just choke off fentanyl production but also cut off the cartels' diversified revenue streams—oil now being at the top of that list. Katarina Szulc. Substack. May 2, 2025. How Mexico’s Cartels Hijacked Crude Oil & the U.S. Clocked it

Mexican Cartel Crude Oil Smuggling Schemes. U.S. Department of the Treasury. Office of Foreign Assets Control. May 2025.  20250501_mexican_cartel_oil.pdf

Navy seizes over 17 million liters of stolen fuel in double ‘huachicol’ busts. MND Staff, Mexico News Daily. March 31, 2025. 17 million liters of stolen fuel seized by Mexican Navy

Illegal Crude Oil Smuggling: Compelling Revelations Driving International Crackdowns + 4 Tips on Fraud Prevention from NTTC. TankTransport. April 30, 2025. Illegal Crude Oil Smuggling: Compelling Revelations Driving International Crackdowns + 4 Tips on Fraud Prevention from NTTC | Tank Transport

Utah oil tycoon family accused of conspiring with Mexican cartel in $300M smuggling scheme: Oil magnate James Jensen and his son Maxwell allegedly trafficked 2,900 shipments of stolen crude oil into the U.S. James Liddell. The Independent. May 31, 2025. Utah oil tycoon family accused of conspiring with Mexican cartel in $300M smuggling scheme | The Independent

Mexico’s drug cartels, now hooked on fuel, cripple the country’s refineries. Drug gangs pressure refinery workers to tap the lifeblood of Mexico’s oil industry. One former worker fled the country. One former gang member helps authorities understand the racket. Gabriel Stargardter. Reuters. January 24, 2018. Mexico's drug cartels, now hooked on fuel, cripple nation's refineries

Treasury Targets Crude Oil Smuggling by Mexican Cartels: Key Takeaways for Energy Companies. International Alert. Miller and Chevalier. May 7, 2025. Treasury Targets Crude Oil Smuggling by Mexican Cartels: Key Takeaways for Energy Companies | Miller & Chevalier

Fuel Theft, Cartels, and Security Risks in Mexico’s Energy Supply Chain. Victoria Sainz. Atlas Institute for International Affairs. March 18, 2025. Fuel Theft, Cartels, and Security Risks in Mexico’s Energy Supply Chain | Atlas Institute for International Affairs

Theft of oil from pipelines: an examination of its crime commission in Mexico using crime script analysis. Arantza Alonso Berbotto & Spencer Chainey. Global Crime. 2021. Theft_of_oil_from_pipelines_an_examination_of_its_.pdf

Oil tycoon busted at lavish Utah mega-mansion, accused of working with Mexican cartels in $300M scheme. Alex Oliveira. New York Post. May 12, 2025. Utah oil magnate charged with working with cartels to smuggle illegal Mexican oil