The oil price meltdown will affect Mexico’s economy and is bound to deepen the global economic crisis, Mexican President Andrés Manuel López Obrador said on Tuesday, a week after he clinched what he touted as a significant victory in Mexico’s foreign policy, refusing to agree to the cuts that OPEC+ had carved out for his country.

Mexico will try to reduce spending with additional austerity measures amid the coronavirus pandemic and the oil price collapse, but it will not dismiss government staff, López Obrador said.

López Obrador’s ‘Mexico First’ energy policy agenda turned the OPEC+ meeting earlier this month into a soap opera after Mexico, part of the non-OPEC producers in the OPEC+ group, disagreed with proposals that it should reduce its production by 400,000 bpd from its October 2018 baseline, offering only a 100,000-bpd cut.

The fact that Mexico’s oil hedge protects it from the oil price crash – which hurts other OPEC+ countries much more – was said to be one of the reasons why Mexico dug in its heels and refused to cut its production as much as its OPEC+ partners asked it to.

Nevertheless, the looming global recession and the collapsing oil prices will hit Mexico’s economy.

As WTI Crude prices crashed by 300% to settle at -$37 a barrel on Monday, the export basket of Mexican oil also plunged into negative territory for the first time ever. According to the daily estimate of the Mexican crude export basket by state oil firm Pemex, the price was -$2.37 a barrel as of Monday, down from $14.35 per barrel on Friday.

Moody’s downgraded Pemex’s ratings on Monday, with Nymia Almeida, Moody’s Senior Vice President, saying:

“The actions took in consideration our expectations for an extended period of negative free cash flow and the need for external funding, despite the company’s efforts to adjust costs and investments to low oil prices.”

Fitch Ratings, for its part, downgraded Pemex for a second time this month, with the latest action on Friday reflecting “limited flexibility to navigate the downturn in the oil and gas industry given its elevated tax burden, high leverage, rising per-barrel lifting costs and high investment needs to maintain production and replenish reserves.”