Mexico spent about 24 billion pesos ($1.25 billion) to lock in costs of oil exports for subsequent yr, or greater than 21% what it paid to hedge crude a yr in the past, in keeping with Finance Ministry knowledge.

The value for getting put choices in the marketplace as of the tip of the third quarter got here to greater than the $1.03 billion spent final yr to guard in opposition to a drop in oil income, in keeping with knowledge launched within the quarterly finances stability. In latest years, Mexico has spent a median $1 billion shopping for the hedges.

Deputy Finance Minister Vanessa Rubio mentioned in mid October that Mexico accomplished its annual oil hedge for 2018. Mexico buys put choices from a small group of funding banks every year in what’s thought of Wall Street’s largest — and best-concealed — annual oil hedge.

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Mexico Finance Ministry proposed a 2018 public finances in September projecting oil exports income at $46/bbl. Lawmakers elevated that assumption earlier this month to $48.5.

Finance Minister Jose Antonio Meade mentioned in an interview in September that Mexico would probably broaden its oil hedge marginally for 2018 because it liberalizes gasoline costs, whereas the associated fee for the federal government to guard crude exports in opposition to a drastic drop in costs can be about the identical as for this yr.

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The Mexican oil hedge runs from the start of December till the tip of November. The nation has made cash 3 times on the hedge because it began to lock-in costs yearly in 2000, together with a report payout of $6.four billion in 2015 after oil costs crashed.

Source: www.worldoil.com

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