Oil price hedges to mitigate risk

ENERGY giant Sasol said yesterday that it had entered into hedges on the oil price to mitigate financial risks next year. The company said it had hedged against downside risks to the price of crude oil. Crude oil is at $53.30 (R728.3) a barrel, while oil cartel Opec and non-Opec nations are set to meet in Vienna tomorrow to sign a supply agreement. This should see oil prices stabilising at between $60 to $70 a barrel following a global oil pact reached last week. Sasol entered into oil put options, for the second quarter of the financial year to end next June, which provide it with an average Brent crude oil price floor of $48.68 a barrel (net of costs) for about 7.6 million barrels. It had also entered into put options for quarter three and a part of quarter four of financial year 2017 which provide it with an average Brent crude oil price floor of $47.06 a barrel (net of costs) for about 16.8 million barrels. The listed company explained that it had a board-approved policy on hedging of financial risks, which allowed it to mitigate specific risks and provide protection against unforeseen movements. Sasol also added that it was currently reviewing other commodity and currency hedges and, should it enter into material hedges, “an appropriate announcement will be made”. Sasol shares increased by 2.62 percent to close at R379 each on the JSE yesterday. – IOL go to www.busrep.co.za.