Mexico said it has hedged all of its oil exports for next year against a price of oil below $70 a barrel, in a sign of how some resource-rich nations are trying to protect themselves against slumping commodity prices amid a global economic slowdown.
Mexico said it has hedged all of its oil exports for next year against a price of oil below $70 a barrel, in a sign of how some resource-rich nations are trying to protect themselves against slumping commodity prices amid a global economic slowdown.
Mexico's Finance Ministry said Thursday that it bought $1.5 billion of put options that guarantee Mexico will get at least $70 a barrel for some 330 million barrels.
If the price is above $70, then Mexico can choose not to exercise the option and sell for the market price.
Mexico has been hedging against the price of oil for years, but normally the country covers only a fraction of total exports. But the steep fall in the price of oil from last year's highs alarmed Mexican officials. The price corresponds to Mexico's expectations of oil income for next year's budget.
"We started this back in July, doing it very slowly to avoid affecting the market," said Rodrigo Brand, a Finance Ministry spokesman.
With oil at Wednesday's closing price, Mexico would have made $9.55 billion on the hedges, the Finance Ministry said.
Author:
Jo Amey
