Mexico bought insurance in the international markets from falling oil prices in 2017, more than 19 billion pesos (more than $1 billion), said on Monday the Ministry of Finance Latin American countries.

Under the terms of the insurance, the average annual price of oil in 2017 is fixed at $42 and covers the production volume of 250 million barrels.

“Such action is protected by the expenditure of the Federal budget from a fall in oil prices below this level”, – stated in the message of the Ministry of Finance.

To buy the insurance in total there were 46 transactions in the international insurance markets, says the Ministry.

According to experts, in 2016, Mexico has all the chances to get a second consecutive year of substantial payments on his oil insurance to cover the fall in oil prices.

The potential payout is estimated at more than $3 billion when the cost of the insurance in $1 billion At the end of 2015 the country has insured their oil risks in terms of falling prices from a pool of international banks on the $49/bbl.

This practice is used in Mexico since 1990, however, never before has it failed to obtain insurance policies for two consecutive years.

Source: Prime

Mexico hedged against falling oil prices 30.08.2016

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