LONDON (BLOOMBERG) - As Mexico and Saudi Arabia fight over a deal to bring the oil-price war to an end, Mexico has a powerful defence: a massive Wall Street hedge shielding it from low prices.. Read more at straitstimes.com.
LONDON - As Mexico and Saudi Arabia fight over a deal to bring the oil-price war to an end, Mexico has a powerful defence: a massive Wall Street hedge shielding it from low prices.
For the last two decades, Mexico has bought so-called Asian style put options from a small group of investment banks and oil companies, in what's considered Wall Street's largest - and most closely guarded - annual oil deal. Slashing 400,000 barrels a day to comply with the OPEC+ deal, rather than the 100,000 barrels a day that Mexico has counter-offered to Saudi Arabia, would put on hold his ambitious plan to return Pemex to its former glory.
"The insurance policy isn't cheap," Mexican Finance Minister Arturo Herrera told broadcaster Televisa on March 10."But it's insurance for times like now. Our fiscal budget isn't going to be hit." However, based on limited public information, alongside historical data about previous years, it's possible to make a rough estimate of the potential payout if prices remain low.'
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