SOURCE: GAZPROM-NEFT.COM
24 July 2020
RUSSIA CONSIDERS MEXICOSTYLE OIL HEDGE Russian President Vladimir Putin has tasked the government with considering the possibility to hedge the country’s oil and gas revenues to protect them from the price decline, Kremlin spokesman Dmitry Peskov said on July 23. This came as a comment to a fresh report by Bloomberg. Citing unnamed senior officials, the agency reported that Russia was considering a Mexico-style hedge. Like Mexico did in the past, hedging massive oil and gas export revenues might protect Russia from any drops in prices.
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t is thus no surprise that the country is wondering how to shield its budget if prices fall any further. Russia’s finances will take a big hit this year after oil prices have collapsed amid global coronavirus lockdowns and a price war with Saudi Arabia. Two other government officials who spoke with the RIA Novosti news agency on condition of anonymity said Russia’s Finance Ministry was against the plan. It already
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has a system for protecting the budget against swings in oil prices. The country’s finance officials use revenue when crude trades above $40 a barrel to buy foreign exchange for the national wealth fund and spends from it to finance the budget when oil prices are lower than $40 per barrel. The hedge would be an additional tool to support the National Welfare Fund when oil 19
