Biggest Oil Hedges Get Pricier on Global Aviation Collapse
- Cost of hedging crude oil production has surged this year
- Retreat in airline hedging making options more expensive
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The cost for oil producers to lock in the price at which they sell their crude has soared because of the collapse in the aviation industry.
It emerged this week that Mexico may be trying to organize its annual oil-price hedge, the biggest sovereign program of its kind in the world. As well as Mexico, producers everywhere from Oklahoma to the North Sea will try to guarantee the future price for their barrels, often through options trades that pay out if the oil market collapses.