(Adds comments from OPEC sources, traders)
By Gabriela Lopez
MONTERREY, Aug 16 (Reuters) - Mexico has nearly completed its oil hedging program for 2017, the country’s finance minister said on Tuesday, adding that what is considered to be the world’s biggest sovereign oil derivatives trade began in mid-June.
Luis Videgaray gave no details on how much crude Mexico was hedging, how much it spent or the average price it paid.
“We have advanced in an important way, we still haven’t finished the process but the vast majority of the options, that is to say the hedge, have already been acquired,” Videgaray said at an event in the northern city of Monterrey.
Traders said the latest activity in Mexico’s sovereign hedge program may have been executed as recently as last week, as a number of 5-million-barrel tranches with an expiry of December 2017 showed up on ICE’s trade repository.
It was not immediately clear if the financial put options were part of the program, but traders said it bore similar hallmarks, including a high premium.
For more than a decade, Mexico’s government has paid for a hedge every year in a bid to guarantee oil revenues in what is seen as the biggest sovereign oil derivatives trade in the world.
The government relies heavily on oil revenue to fund the federal budget, and its finances have been pummeled by falling international crude prices.
In December, Mexico said it received a record $6.284 billion from its oil hedge program to help the government offset a drop in income from crude sales by state-run Pemex.
Last year, Mexico purchased put options that locked in an average price of $76.40 per barrel, while Mexico’s crude mix averaged just above $43 a barrel in 2015.
Despite a recent pickup in oil prices, crude is currently trading under $50 a barrel.
The Organization of the Petroleum Exporting Countries will probably revive talks on freezing oil output levels when it meets non-OPEC nations next month, OPEC sources told Reuters, citing Saudi Arabia’s preference for price support measures. (Reporting by Gabriela Lopez in Monterrey and Catherine Ngai in New York; Editing by Simon Gardner and Peter Cooney)