However, Argentinian referee Nestor Pitana called for a review from the video assistant referee and it was eventually ruled Pepe was one of four players who were offside from Joao Moutinho's first cross into the box following the failed set-piece.
Mexico wasted no time finding an equalizer as Javier "Chicharito" Hernández scored from close range with a diving header in the 42nd minute.
The tournament has just begun, but Portugal and Mexico have already come under pressure - Russia's victory over New Zealand (2-0) is urging and these teams are aiming for the maximum result.
Russian Federation are next up for Portugal in Moscow's Spartak Stadium on Wednesday, while Mexico face New Zealand in Sochi on the same day. In its last two games, Portugal has won both games and outscored its opponents 7-0.
"Nothing is going to change", Portugal goalkeeper Rui Patricio said Saturday, a day before Portugal's Confederations Cup debut against Mexico in Kazan. "I have a pact with the players and we treat these personal matters away from the national team". So we have to stay calm and think about the next game.
Trump says Scalise 'took a bullet' for all of us
When the members of the Republican team were announced , mention of Scalise's name drew a standing ovation throughout the stadium. The assailant had nursed grievances against President Donald Trump and the GOP - and was shot by police and later died.
With the half entering the stoppage time, former Hoffenheim striker Vargas thought he had given Chile a deserved lead after he finished off Arturo Vidal's through ball with a chipped finish over Ondoa.
The assistants duly looked it over, and awarded what looked to be a correct offside decision against Portugal, disallowing the goal.
KAZAN, Russia (AP) - Cristiano Ronaldo is finally getting an attacking partner he can count on.
The reminder from this game, yet again, was that Portugal remain reliant on Ronaldo to an unhealthy degree.
"We know we didn't play well", he said. I try to listen to him and he tries to help me as best he can.
"We were at least as good as they were and they're the current European champion", said the Mexico coach Juan Carlos Osorio.
Nani, Ricardo Quaresma and Eder were in the squad when Portugal won the European championship a year ago, with Eder scoring the extra-time victor in the final against host France, but none made it to Fernando Santos' squad for the Confederations Cup, the World Cup warm-up event.