• 12 hours The Federal Reserve and Money...Aspects which are not widely known
  • 8 minutes How Far Have We Really Gotten With Alternative Energy
  • 12 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 4 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 6 days "And this is perhaps the most dangerous kind of government there can be."
  • 13 hours Coincidence of EIA Report Delay? - "I had seen it delayed minutes, and a couple of times a few hours, but don’t recall something like this — do others?" asks Javier Blas
  • 2 days Demonising fossil fuels has caused major grid problem in Australia
  • 13 hours "...too many politicians believe things that aren’t true." says Robert Rapier
  • 2 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 1 day Welcome to Technocracy - The New World Energy Order... "1000s Of Sydney Homes Plunged Into Darkness As Aussie 'Price Cap' Policy Sparks Energy Shortage"
  • 3 days "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 327 days Beware the Left's 'Degrowth' Movement (i.e. why Covid-19 is Good)
  • 5 days ESG Topic - "German Police Raid Deutsche Bank, DWS Over Allegations Of Greenwashing" - ZeroHedge Bloomberg and others
Germany Triggers Phase 2 Of Gas Emergency Plan

Germany Triggers Phase 2 Of Gas Emergency Plan

Germany has triggered the second…

BP Joins Shell In World’s Largest Oil Hedge

BP has helped Mexico to carry out its annual oil hedge program in which the country spent the equivalent of $1.25 billion to lock in oil export prices for 2018, industry sources told Reuters on Tuesday, in what is a second oil supermajor after Shell helping Mexico in Wall Street’s biggest oil hedge.  

In September last year, Shell became the first oil major to venture into the territory of Wall Street’s biggest banks in helping Mexico make the world’s largest commodity hedge, four sources with knowledge of the issue told Bloomberg at the time.

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 also earned Mexico—and a few large investment banks—billions since it was first made in the 1990s.

Mexico buys put options from investment banks in what is the biggest annual oil deal on Wall Street. Mexico typically hedges 200-300 million barrels of oil, and with the put options it has the right, but not the obligation, to sell oil at a previously set price and timing.  

The biggest Wall Street banks have dominated the oil hedge for years, but their role in helping Mexico lock in oil export prices has lessened, due to stricter rules for banks trading commodities.

In 2016, Mexico spent US$1 billion on buying put options to lock in an average export price of $38 per barrel of its crude basket for this year.

Related: Putin’s Masterstroke Of Energy Diplomacy

This year, Mexico is hedging for next year to lock in an average export price of $46 a barrel.

According to data by Mexico’s Finance Ministry quoted by Bloomberg, the country spent the equivalent of around $1.25 billion on the oil hedge program for 2018, which was 21 percent higher than the oil hedge in 2016 to lock in prices for 2017. Mexico’s spending on the world’s biggest oil hedge has been at around $1 billion over the past few years.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News