Today’s Needull is a recent classic Bloomberg article, a dose of ‘business’ with a ladle of ‘mystery story’. It shares how the oil hedging in Mexico works, where Mexican finance officials go out every year and flood a bunch of banks with orders to hedge the country’s oil production. If you have not heard of Hacienda hedge, well, get ready to be amazed and amused, as the below numbers themselves speak of what its impact is.
For its part, Mexico has shown a Wall Street-style wizardry in trading oil. It usually makes money on its hedges—sometimes a lot of money, as in 2008-09. From 2001 to 2017, the country made a profit of $2.4 billion; its hedges raked in $14.1 billion in gains and paid out $11.7 billion in fees to banks and brokers.