• 3 minutes Could Venezuela become a net oil importer?
  • 7 minutes Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 12 minutes Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 4 hours Oil prices going Up? NO!
  • 1 day Could Venezuela become a net oil importer?
  • 8 hours Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 4 hours Tesla Closing a Dozen Solar Facilities in Nine States
  • 2 hours Renewables to generate 50% of worldwide electricity by 2050 (BNEF report)
  • 5 hours Could oil demand collapse rapidly? Yup, sure could.
  • 1 day Gazprom Exports to EU Hit Record
  • 2 hours Oil prices going down
  • 1 day EU Leaders Set To Prolong Russia Sanctions Again
  • 1 day Why is permian oil "locked in" when refineries abound?
  • 1 day Oil Buyers Club
  • 2 days Saudi Arabia plans to physically cut off Qatar by moat, nuclear waste and military base
  • 3 hours Saudi Arabia turns to solar
  • 1 day EVs Could Help Coal Demand
  • 2 days China’s Plastic Waste Ban Will Leave 111 Million Tons of Trash With Nowhere To Go
  • 20 hours Russia's Energy Minister says Oil Prices Balanced at $75, so Wants to Increase OPEC + Russia Oil by 1.5 mbpd
A Storm Is Brewing In The Southern Gas Corridor

A Storm Is Brewing In The Southern Gas Corridor

While Russia looks to circumvent…

Permian Discount Could Rise To $20 Per Barrel

Permian Discount Could Rise To $20 Per Barrel

Midstream constraints plaguing Permian drillers…

Mexico Begins Mingling With Wall Street For 2018 Oil Price Hedge

Oil

Mexico City is making moves to secure its annual oil price hedging program, according to sources familiar with the process who spoke to Bloomberg.

A finance team has begun to ask Wall Street banks for final rates on put options that will lock in oil prices for 2018 via the New York investment community’s largest annual oil deal. The government then has the option to sell oil at the price determined in the contract, or the higher rate determined by market supply and demand.

The Mexican Finance Ministry declined to comment on the inquiries, which began late last week, sources said. The agency predicted an average oil price for local crude of $42 for 2017 and $46 for 2018. The January 2017 price for Mayan crude for the U.S. was $45.75 a barrel.

For 2017, the country’s hedging scheme has guaranteed an average barrel price of $38, though in the first five months of this year, Mexican oil sold for $44 a unit. PEMEX’s separate hedging program becomes useful when prices drop below $42 a barrel. The Mexican government made a record $6.4 billion off of its hedge in 2015, the first year of the oil price crash.

The program’s success has encouraged other countries to follow suit. Top Iraqi oil marketer Falah Al Amri suggested last month that Iraq is interested in creating an oil price hedging program that would lock in prices for future trades well in advance—just like Mexico’s existing strategy, but almost twice as large in size.

“We will not rush. This is a long process,” SOMO chief Al Amri said. “We must make sure we do not lose money. You know the Iraqi parliament, it would not accept that.”

Iraq is currently building a plan for its own program by sending officials over to countries who have successfully executed similar strategies in the past, Al Amri told reporters.

By Zainab Calcuttawala for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

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