• 3 days Retail On Pace For Most Bankruptcies And Store Closures Ever In One Year: BDO
  • 10 minutes America Could Go Fully Electric Right Now
  • 5 days Majors Oil COs diversify into Renewables ? What synergies forget have with Solar Panels and Wind Tirbines ? None !
  • 3 mins Rethinking election outcomes for oil.
  • 5 hours Clean Energy Is Canceling Gas Plants
  • 6 hours The Leslie Stahl/60 Minutes Interview with President Trump
  • 17 mins The City of Sturgis Update on the Motorcycle Rally held there, and the MSM's reporting hence
  • 9 mins China leaders meet to discuss proposed 5 year economic plan.
  • 4 hours Australia’s Commodities Heartland Set for Major Hydrogen Plant
  • 6 mins America's Frontline Doctors - Safely Start Living Again!
  • 22 hours Video Evidence that the CCP controls Joe Biden
  • 19 mins Saudi Oil Minister Abdulaziz said getting rid of oil "Far Fetched and Unrealistic". . True. . . but
  • 1 day OP article : "Trump blasts Biden Fracking Plan . . . "
  • 7 hours Irina Slav has a good article - Regarding Investors & Oil
  • 1 day GAME CHANGER: MIT Startup Commonwealth Fusion says Commercial Product by early 2030s ! THIS CHANGES EVERYTHING..
  • 7 mins Conoco Pledges ‘Net-Zero’ Emissions in Break With U.S. Rivals
  • 1 day Biden denies fracking ban
  • 2 days Is the coal industry on the way out?
Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Russia Considers Emulating The World’s Largest Oil Hedge

Russia is considering whether to adopt a kind of state oil hedging program, similar to Mexico’s oil hedge, to protect government revenues from oil price crashes in the future, Russian news agency Interfax reported on Wednesday, quoting sources familiar with the matter.  

The Mexican oil hedge, or the Hacienda Hedge, is considered the biggest hedging bet on Wall Street as well as perhaps the most secretive. It has earned Mexico—and a few large investment banks—billions of U.S. dollars.

Every year, Mexico buys put options from investment banks and typically hedges a whopping 200-300 million barrels of oil. With the put options, it has the right, but not the obligation, to sell oil at a previously set price and timing.

Such hedges minimize the losses in case oil prices crash. Earlier this year, it was the oil hedge that is thought to have saved Mexico’s economy from collapsing.

Now Russia is weighing an oil hedge and its President Vladimir Putin has instructed the relevant ministries and departments to submit a report about the pros and cons of initiating a hedging program by July 30, a source in Russia’s economic and finance departments familiar with the document told Interfax.  

According to the idea, Russia’s sovereign wealth fund, the National Wealth Fund (NWF), will provide the money for an oil hedge.

Russia’s state-controlled oil giant Rosneft has approached Putin with a proposal to consider setting up an oil hedge, a source told Interfax, but Rosneft declined to comment on the matter to the news agency.

Currently, Russia’s economy is suffering the consequences of the oil price crash it helped create with the temporary rift with its OPEC+ partner Saudi Arabia in March. The Russian ruble crashed, and Russia’s oil income shrank as a result of the plunge in oil prices.

The oil price crash, along with the coronavirus-driven global recession, will result in Russia’s economy shrinking this year by 6 percent, or by the most in 11 years, the World Bank said in its latest economic report on Russia earlier this month.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Robert Berke on July 23 2020 said:
    "Currently, Russia’s economy is suffering the consequences of the oil price crash it helped create with the temporary rift with its OPEC+ partner Saudi Arabia in March."

    Russia did not crash the market by refusing to go along with Saudi's plan to create a global glut and collapse prices. The Saudi's were directly responsible for causing a global glut, much as it did in 2014. To say otherwise is to play fast and loose with the facts.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News