• 1 hour Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 3 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 4 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 3 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 4 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 7 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 7 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

More Info

Mexico To Reap $2.9 Billion In Profits From Oil Price Hedges In 2016

Trading floor

The Mexican government can expect a $2.9 billion profit from the oil price hedges it set up in 2016 – marking the second consecutive year the North American country has significantly profited off of the strategy, according to the International Monetary Fund (IMF).

Last year, the country earned a record $6.4 billion from contracts brokered with large banks, including JPMorgan Chase, Goldman Sachs, and Citigroup.

The 2016 agreement, which began coverage on December 1st of last year, guaranteed Mexico profits equivalent to a $49 Brent barrel.

The $2.9 billion figure, which the IMF provided in response to questions emailed to them by Bloomberg, has yet to be confirmed by the Mexican Energy Ministry. The hedge will be completed at the end of this month, at which point the government will either validate or discredit the figure.

For over a decade, Mexico’s government has paid for a hedge every year as part of one of the world’s biggest sovereign oil derivatives trade. The profits from the strategy help Mexico City pad budgets, especially as new austerity measures make citizens increasingly restless.

“The Mexican government has done a good job at buying these put options because they have helped to smooth the transition of public finances towards lower oil prices, but it’s just breathing room,” Carlos Capistran, a Bank of America economist, told Bloomberg earlier this year. “This buys the government time to think about the best way to go about expenditure cuts.”

State-run oil giant Pemex, which finances roughly 20 percent of the federal budget, reported record low production earlier this year – meaning that the government may be leaning towards stronger budgetary restraint as the markets sustain low oil prices due to the supply glut.

By Zainab Calcuttawala for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment
  • JCLincoln on November 23 2016 said:
    $2.9 Billion will go a long way to building that wall that Mexico promised to pay for.

Leave a comment

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