How effectively do major oil producing companies use derivatives in hedging market-based risk?

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Nyssanova, Zhuldyz
Issue Date
MBA in Finance
Dublin Business School
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The researcher had established the goal to lighten up the crude oil market from the perspective of oil producing companies using derivatives as a part of their risk management strategies. Firstly, the researcher investigated that derivatives are an effective tool of a risk management during the market volatility, however, there was no empirical evidence found toward their effect on company’s enterprise value. Secondly, it has been established that the crude oil market is currently dominated more by speculators rather than hedgers, however, oil producing companies themselves mostly act as hedgers in the market. Author keywords: Finance, Derivatives, Oil industry