• 4 minutes Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 7 minutes Who Really Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 11 minutes Trump Will Win In 2020
  • 15 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 4 hours Let's shut down dissent like The Conversation in Australia
  • 13 hours Drone attacks cause fire at two Saudi Aramco facilities, blaze now under control
  • 39 mins Saudi State-of-Art Defense System looking the wrong way. MBS must fire Defense Minister. Oh, MBS is Defense Minister. Forget about it.
  • 6 hours Saudis Confirm a Cruise Missile from Iranian Origin
  • 8 hours Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 5 mins Trump Accidentally Discusses Technology Used In The Border Wall
  • 22 mins One of the fire satellite pictures showed what look like the fire hit outside the main oil complex. Like it hit storage or pipeline facility. Not big deal.
  • 6 hours Donald Trump Proposes Harnessing Liberal Tears To Provide Clean Energy
  • 6 hours Saudis Buying Oil From Iraq
  • 1 hour Ethanol is the SAVIOR of the Oil Industry, Convenience Store Industry, Automotive Supply Chain Industry and Much More!
  • 23 hours Democrats and Gun Views
  • 22 hours China Faces Economic Collapse
Alt Text

Aramco’s Oil Disruptions Could Last Months: Analyst

Energy Aspects’ chief oil analyst…

Alt Text

Is OPEC’s No.2 Finally Cutting Production?

Since OPEC started restricting oil…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Mexico Hedges Oil at $55 A Barrel

Amid a fuel crisis that is spiraling out of control, the notorious Mexico oil hedge this year is worth US$1.23 billion with the average export price of Mexican crude seen at US$55 a barrel, Reuters reports, citing the country’s Finance Ministry. The ministry did not specify exactly how many barrels the hedge covered.

Last year, Mexico locked in an average export price of US$46 per barrel of crude oil in its annual oil hedge, which is closely watched as the biggest in the world. During the year, the Mexican basket of crude grades hit a high of US$77 a barrel and a low of US$45.18 per barrel, but for most of the year stayed firmly above US$50 a barrel.

The hedge, or the Hacienda Hedge, is considered the biggest hedging bet on Wall Street as well as perhaps the most secretive. It has also earned Mexico—and a few large investment banks—billions since it was first made in the 1990s.

“With these actions we protect that budget ... against drops in prices of oil below this level,” the Finance Ministry said in a statement. “As a result of these complementary strategies, a price of $55 per barrel was assured for the Mexican export blend in 2019.” Related: Oil Enters Bull Market As Shorts Are Wiped Out

The hedge consists of the Mexican government buying large amounts of put options from a selection of investment banks. The average that the government has spent on these put options in the last few years has been US$1 billion, Bloomberg’s Nacha Cattan writes. In 2000, Mexico began locking in prices annually and has since made a profit three times, including a US$6.4-billion windfall in 2015 after the price crash from mid-2014. For 2016, the hedge made Mexico US$2.7 billion.

Mexico’s new government is eager to increase local oil production, which has been steadily declining for more than a decade, but it also wants to export less of it and refine more at home to reduce Mexico’s dependence on imported refined products.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play