• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 5 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 17 hours How Far Have We Really Gotten With Alternative Energy
  • 9 days What fool thought this was a good idea...
  • 11 days Why does this keep coming up? (The Renewable Energy Land Rush Could Threaten Food Security)
  • 7 days A question...
  • 12 days They pay YOU to TAKE Natural Gas
  • 18 days The United States produced more crude oil than any nation, at any time.
Game-Changing Research Unlocks New Wind Energy Potential

Game-Changing Research Unlocks New Wind Energy Potential

École Polytechnique Fédérale de Lausanne…

Mexico Working On Famous 2024 Oil Hedge

Mexico is currently working to lock in crude oil prices for export for next year as part of its lucrative oil hedging program.

Mexico’s oil hedging program—referred to as the Hacienda Hedge—is fairly universally thought of as quite remarkable—profitable more often than not—and in some years when oil prices fall sharply, extremely profitable.

The idea behind Mexico’s well-to-do billion-dollar Hacienda Hedge allows Mexico to buy put options in the Fall of each year for the coming year that give Mexico the option to sell its oil at a specific locked-in price. The options do not require Mexico to sell at that price—just the option to. Mexico has spent more than $1 billion each year in fees on these options, bargaining with banks, Big Oil companies, and oil traders to negotiate favorable pricing for that $1+ billion.

The details of the Hacienda Hedge are not shared publicly, with the negotiations carried out in deep secret. Last year, Mexico began its hedge talks around this same time.

The hedging program is designed to cover and protect Mexico’s budget, and in recent years, it became even more secretive when it classified details about the hedge that were previously made public, including the overall cost of the hedge and the strike price for the put options. It no longer even discloses the names of the counterparties.

In 2021, Mexico shook things up when it announced it would look for quotes year round in a move designed to give Mexico more leverage at the negotiating table. This way, the banks and traders are unsure whether Mexico is seeking quotes or buying.

Last year around this time, an anonymous Bloomberg source close to the matter said that its 2023 hedging program would protect oil revenues if oil fell below $75 per barrel.

By Julianne Geiger for Oilprice.com

ADVERTISEMENT

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