More oil hedging: The government has purchased fresh hedging contracts covering 35% of its estimated oil imports for the current fiscal year that ends in June 2024, As harq Busine ss reported yesterday, citing an unnamed senior government official. The contracts lock in crude purchases at around USD 75-80 per barrel, according to the official, below the USD 85 per barrel price projected in the FY 2023-2024 budget. The government expects the country to import around 100 mn barrels of crude this year.

The oil market has been on a tear so far this fiscal year: The price of Brent crude has climbed more than 20% since the end of June on the back of tightening global supply caused by OPEC+ production cuts and rising demand in Asia. Brent rose to its highest level since January last week, closing Friday’s session up 1.9% at USD 88.55 per barrel.

Who’s on the other side of the contract? Asharq’s source didn’t disclose which financial institutions the government has signed the contracts with. In previous years, it has signed contracts with Citibank and JPMorgan.

REMEMBER- The government’s most recent hedging contracts reportedly expired at the end of last fiscal year. It agreed to purchase hedging contracts in December after the war in Ukraine triggered extreme volatility in the global commodity markets in 2022.

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