In 1921 Mexico produced a quarter of world's petroleum, making the country the second largest producer in the world, but by 1930 it only accounted for 3 per cent of world s production. To date the discussion has mostly relied on events taking place in Mexico for explaining the decline of the industry. Very little attention has been placed to developments in petroleum industry elsewhere, except Venezuela. Practically no attention has been paid to the reasons for the rise of oil output in Mexico. This neglects the massive changes taking place in the petroleum industry worldwide during the Great War years and its aftermath, and overall ignores the shortage of oil that occurred in the world s markets between 1918-1921. These are crucial events in order to understand the early rise of the Mexican oil industry and set the basis for a better understanding of the subsequent sudden decline.