Originally Posted by
Mick100
I thought I explained this fairly well a couple of pages back but it seems some people still don't get it, except bermuda
if the oil price is above USD $86 then NZO lose the difference betweem $86 and whatever the oil price is - so if the oil price goes to $100, NZO lose $14/bbl on the hedged amount which is, as I have already said, 100,000 bbls over the next three yrs
put another way - NZO have sold forward 100,000 bbls at US $86. -
the amount of money NZO lose can't be determined because we don't know what the future oil price is going to be - NZO might not lose any money at all - if the oil price went to $200 tomorrow, then we lose $114/ bbl on 100,000 bbls
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