Mexico has asked top Wall Street banks to submit quotes for its giant oil hedging programme, sources familiar with the matter said on Friday, while trading in crude oil options has increased this week in advance of the megadeal.
The finance ministry has asked banks for price quotes, one source with direct knowledge of the matter said, signalling the beginning of the process to execute the hedge. The ministry was not immediately available for comment.
Every year, Mexico buys as much as one billion dollars in financial contracts, the world’s largest oil hedge programme, to protect its oil revenues. Bankers and officials on both sides of the deal expect a smaller hedge this year because the options used to protect oil profits are more expensive than last year.
The oil market crashed earlier this year, with the United States crude benchmark falling to negative $40 a barrel in April. It