Oil output cut positive for Mexico, finance minister says

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Wednesday, November 30, 2016

OPEC's agreement to reduce oil production is positive for Mexico, according to finance minister José Antonio Meade Kuribreña.

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Crude prices climbed above US$50/b on Wednesday in the wake of the announcement of the move, aimed at trimming a supply glut.

He was quoted by La Jornada newspaper as saying that, in the long-term, "relevant oil price conditions are not those of today on the spot market, but that in the short term an environment of better prices would, without doubt, benefit Mexico."

Meade added that oil put options taken out by Mexico last year to hedge against a further deterioration in oil prices will be paid before the end of the year.

Meade attended an event to mark the placement of Fibra E securities issued by Infraestructura Viable (FVIA) and CerPis securities issued by MIRA at the Mexican stock exchange (BMV) on Wednesday, which will allow the mobilization of pension funds worth around 20bn pesos (US$974mn) and generate investment in strategic sectors, according to a finance ministry (SHCP) press release.

The first public offering of Fibra E investment securities in Mexico was completed in October, raising more than US$600mn.

Meade said the issuance of such securities is a sign of confidence among foreign investors in Mexico regarding the country's long-term outlook.

"Mexico requires more public and private investment, but our country has projects that are generating flows, and those flows can feed savings and the desire to find other investment mechanisms," he said.