Mexico's oil production continues to decline.

A three paragraph article in today's Houston Chronicle reports that Pemex has had to reduce the amount of crude oil it supplies to Texas refineries, because output at its Cantarell Field fell to an almost 12-year low in May. Cantarell is the world's third-largest oil field.

The oil reserves that Pemex is counting on to replace Cantarell's declining production are located in the deep waters in the Gulf of Mexico. Pemex is just beginning to develop these new reserves. In fact, Mexico's major political parties are still squabbling over whether to allow Pemex to contract with foreign oil field service companies to assist in developing these reserves. Don't count on any significant production coming online from these fields anytime soon. This does not bode well for the world's future supply of oil.