Mexico to net USD 2.9 b from oil hedges

MEXICO CITY, November 24, 2016 – Mexico can expect some USD 2.9 billion from hedges against the low price of oil this year, the IMF said on Tuesday.

In 2015, the country spent some USD 1.09 billion on put options that allowed it to sell its 2016 oil at USD 49 a barrel, or about 42% higher than the average market price, Bloomberg reported.

Mexico also collected a record of USD 6.4 billion last year from the hedges, which it has been purchasing as part of a decades-long strategy to isolate its economy from the fluctuations of the markets. Next year, the government has locked in some USD 9.5 billion in oil sales in an innovative scheme that includes Dutch major Shell in addition to banks such as JPMorgan Chase, Goldman Sachs, Morgan Stanley, Barclays, Citigroup and BNP Paribas.

Each year in the past decade, Mexico has invested an average of USD 1 billion buying such options, though this will be the first time it reaps gains in two consecutive years. Its second-largest profit from the trade was in 2009, when it netted some USD 5.1 billion.

In 2015, the country earned USD 23.2 billion from oil exports.

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