Egypt has bought more derivative contracts to protect itself against a rise in oil costs, as some importers seek to take advantage of this year’s price rout.

The most populous Arab nation has almost doubled its oil hedges during the 2020-21 fiscal year ending in June, Finance Minister Mohamed Maait said in an interview.

“We did a huge number of hedging contracts,” Maait said from his office in Cairo, without disclosing the size of the program or other details. Egypt also hedged in the previous two financial years, though it didn’t say how much money it spent.

Oil prices sunk in March and April as the coronavirus spread around the world and lockdowns caused energy demand to collapse. Benchmark Brent crude has since risen to almost $50 a barrel but is still down 25% this year. While that’s hammered oil exporters, it’s helped the finances of importers, especially those which, like Egypt, subsidize some fuel.

Importers wanting to lock in the benefits can buy call options, which give holders the right to acquire oil at a predetermined price. In Wall Street jargon, the option is “in the money” if oil rises above the strike price.

Maait is yet to decide the plan for the next fiscal year. “We are covered until June 30,” he said.

The North African country used Citigroup Inc. and JP Morgan Chase & Co. to buy derivatives the first time it hedged against rising crude prices. It pumps some oil but became a net importer in 2011. The government’s budget is based on an average crude price of $61 a barrel, compared with $68 in the last fiscal year.

Egypt slashed subsidies on most petroleum products last year as part of an economic reform program linked to a $12 billion loan from the International Monetary Fund.

The country continues to partially subsidize diesel and butane gas. Local prices are set quarterly, taking into account global oil prices and the Egyptian pound’s exchange rate.

Wheat Hedges

Although it’s likely to be far smaller, the hedging program is a mirror image of Mexico’s, where the oil exporter spends billions of dollars to protect against lower prices. This year, the Mexican government will receive a payout of about $2.5 billion from put options, Bloomberg reported.

Most countries don’t disclose their hedging programs, though oil importers Morocco, Jamaica and Uruguay have bought protection in the past.

Egypt is one of the world’s biggest buyers of wheat and is also considering hedging against steeper prices for the grain.

“We are in talks with some banks,” Maait said.