August 2018, Vol. 245, No. 8

Features

Mexico Likely To Keep Making the World’s Biggest Oil Hedge

By Tsvetana Paraskova The Mexican oil hedge, or the Hacienda Hedge, is considered the biggest hedging bet on Wall Street as well as perhaps the most secretive. It has earned Mexico – and a few large investment banks – billions of U.S. dollars.   Mexico buys put options from investment banks and typically hedges a whopping 200-300 million barrels of oil a year. With the put options, it has the right, but not the obligation, to sell oil at a previously set price and timing.  But will this tradition continue under the newly elected administration? Throughout his campaign, Mexico’s now President-elect Andres Manuel Lopez Obrador kept the oil industry on edge with comments and promises that

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