• 3 minutes Australian power prices go insane
  • 7 minutes Wind droughts
  • 11 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 15 hours Is Europe heading for winter of discontent with extensive gas shortages?
  • 6 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 14 hours What-If - Russia decided to take out the Saudi and Kuwait oilfields
  • 19 hours "As the Earth Cools, the Climate Change Hoax Heats Up" by Michelle Edwards
  • 19 hours "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 3 days "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 3 days "Mexico Plans to Become an Export Hub With US-Drilled Natural Gas" - Bloomberg - (See image)
  • 15 hours 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 16 hours The United Nations' AGENDA 2030 - The vision for One World Governance ...an article by the famous Dr Robert Malone
  • 22 hours PROFOUND ! "Russian Ruble relaunched linked to Gold and Commodities" by the famous Ronan Manly -- (NOTE the censorship by the MultiPolar New World Order of The Great Reset))
Bullish Forecasts Support Crude Prices

Bullish Forecasts Support Crude Prices

U.S. West Texas Intermediate crude…

Mexico Overhauls Its Huge Oil Hedge

Mexico’s billion-dollar oil hedge to protect next year’s revenues against oil price volatility is getting an upgrade—and the new Hacienda Hedge 2.0 is getting more than just a facelift.

Instead of buying put options all at once, which gives Mexico the option to sell its oil at a specific locked-in price (but not the obligation to), Mexico may purchase put options in smaller batches throughout the year.

It is a strategy that airlines already use, according to Bloomberg, and it is a big shift in strategy. 

This trickle-in strategy will prevent oil market swings and speculation from others in the market that may attempt to trade ahead of Mexico.

Mexico spent $1.23 billion to protect its 2019 crude oil revenues, locking in a fixed price of $55 per barrel. In April last year, Mexico’s President Manuel Lopez Obrador said that Mexico was prepared to reap $6.2 billion from the hedge, which was at $49 per barrel at a time when the Mexican basket price was a bit more than just $7 per barrel.

While Mexico hasn’t been transparent about its secret dealings for the massive hedges, it’s generally thought that Mexico’s oil hedge—the largest such deal on Wall Street, does pretty well.

Bloomberg estimates based on government data show that Mexico has spent $15.1 billion in fees buying put options over the last two decades, but has earned $16.5 billion over the course of those twenty years—with the biggest profits mostly in 2015 and 2016 when oil prices tanked.

Banks and oil traders on the other side of the hedge have in the past included Citi, Goldman Sachs, BP, JPMorgan, and Shell.

The average cost of Mexico’s annual hedge is $1.2 billion per year, Deputy Finance Minister Gabriel Yorio said last year, and encompasses between 200 million and 300 million barrels.

By Julianne Geiger 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