Hedge Now Against Fuel Prices

 

Mandara are an amazing hedging and derivatives trading company. They hedge the cost of oil for clients companies that use a large amount of oil and/or petrol. They make sure that even if there are fluctuations in the price of oil, this will not have an adverse affect on their business. They only hire the most talented and focused, so they can provide a world class service to their valued clients.

 

Oil hedging is when firms who buy a significant amount of oil, can buy the oil at a set price for a set period of time. For this to work you would have to get the contract created, so you would always pay the current price of oil even in the future. Oil hedgers can employ what is known as a short hedge, to lock in a future selling price for an ongoing production of crude oil. That will be ready for sale sometime in the future. So if the price of oil drops, hedgers will then make more money. Firms sign up with companies like Mandara, which helps the hedgers to make more money.

 

Fuel hedging is known as a contractual tool which large fuel consuming companies use to reduce their exposure to rising fuel costs; these companies could include air lines, cruise lines and trucking companies. This allows companies who consume large amounts of fuel to establish a fixed cost. They will enter a hedge contract which protects them from fuel prices in the future which could be higher than the current prices. The contract means, that the price of fuel at the time its agreed, is the price which will be paid for fuel until the contract ends; this price is still paid even if the price of fuel increases out of the contract you would still pay the agreed price. There are different reasons that you should hedge such as its a proactive strategy for budget protection, insurance against price fluctuations and due to the oil market being volatile it means the fuel and oil prices fluctuate.

 

When company’s hedge oil they protect themselves from increases in the price of oil, this can help to save company’s a large amount of money, as they are getting it for a cheap price. Companies who have high oil exposures, tend to be the ones who do this as oil will cost them a lot of money overall. People should lock in to the prices now, as they could stay low for the next 5 to 10 years or they can increase.  However, if you hedge and lock in on these prices and the prices of oil increase you won’t have to pay any extra. In the long term, doing this could end up saving your businesses a lot of money.