Mexico driving put skew in Brent, say brokers

The put skew in Brent crude oil is close to its yearly high. This is being driven by the hedging programme of Mexico, as well as more general risk aversion on macroeconomic worries, according to brokers

The slide of Brent crude oil into a deep put skew over the past three months has been driven to a significant extent by Mexico buying put options to protect the value of its future oil production, according to brokers.

"We generally have once a year what's called the Mexican hedge, when Mexico comes in and hedges its production," says Paul Doherty, an oil options broker at OTC Global Holdings in London. "So they come in and buy a load of puts. That's compounded it, on top of the actual price