June 25, 2024

(Bloomberg) — Egypt hedged its oil supply amid efforts to revive an economy battered by the worst foreign-currency crunch in years.

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Finance Minister Mohamed Maait confirmed the hedge Tuesday, saying it’s in place for the country’s fiscal year which ends next June. He declined to provide further details, but said imports total about 150 million barrels of oil a year.

Egypt is one of a handful of nations that engage directly in the oil derivatives market to lock in supplies. Such sovereign programs, which also include the giant secretive hedge by Mexico, are closely watched by options traders and dealers as they can make the governments involved significant market players.

Unlike Mexico, Egypt hedges its purchases rather than sales. The North African nation, gearing up for a presidential vote slated for December, is mired in economic strife that’s been amplified by Russia’s invasion of Ukraine. The country’s currency has been devalued three times since early 2022 and a fourth devaluation is expected.

Read More: Egypt Calls December Presidential Vote as Economic Woes Grow

Egypt has previously taken similar steps to guard against volatility in global oil markets. In 2020, the nation snapped up a “huge number” of derivative contracts, almost doubling its oil hedges during the fiscal year.

–With assistance from Alex Longley.

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