Mexico has embarked on a plan to launch its annual $1 billion oil hedging programme by asking banks for quotes, while buying in financial oil options contracts for 2020 has risen in recent days, consistent with the giant trade, sources familiar with the deal on said Wednesday, September 5th.
Banks have been submitting offers for the hedge, a Wall Street source and a Mexican congressional source familiar with the programme told Reuters on Wednesday, adding that Mexico had requested these quotes.
Mexico’s government has paid for a hedge for more than a decade in a bid to guarantee its revenues for 2020 from oil exports by the state-run company Pemex. The highly anticipated oil trade is deemed the world’s top sovereign derivatives trade.
Last year, Mexico’s 2019 sales were hedged at an average price of $55 per barrel in a deal worth $1.23 billion. Pemex separately hedges its own sales, having resumed the practice in 2017 for the first time in 11 years.
The Mexican Finance Ministry did not respond to a request for comment.