Mandara are a fantastic hedging and derivatives trading company. They hedge the cost of fuel and oil for clients companies that use large amounts of the product. They make sure that even if there are fluctuations in the price of oil, this will not have an adverse affect on their business. They only hire the most talented and focused, so they can provide a world class service to their valued clients.
Fuel hedging is a contractual tool which is used to reduce or eliminate a company’s exposure to fuel costs. It allows companies to pay a fixed cost for fuel, for a set period of time. The contract means, that the price of fuel at the time its agreed, is the price which will be paid for fuel until the contract ends; this price is still paid even if the price of fuel increases out of the contract you would still pay the agreed price. To do this they have to enter a hedge contract to mitigate their exposure to fuel prices which could become higher than the current prices. Fuel consumers can hedge against the price of fuel by taking up a place on the fuel market. Reasons to hedge would include the fluctuating fuel oil prices; this is because the oil markets are extremely volatile and as insurance against price fluctuations. Oil hedging is when firms who buy a significant amount of oil, can buy the oil at a set price for a set period of time. For this to work you would have to get the contract created, so you would always pay the current price of oil even in the future. Oil hedgers can employ what is known as a short hedge, to lock in a future selling price for an ongoing production of crude oil; which will be ready at some point in the future.
Companies tend to hedge against the frequently changing price of oil and fuel to help to save them money. They do this because even though fuel may be at a good, low price now it could start increasing at any time; if they hedge they don’t have to worry about the increasing prices. However, the contract they make can last as long as or as short as they want, to allow them to decide more freely. Hedging is ideal for businesses such as air lines and cruise lines, as they use a large amount of fuel, so this can help to save them a lot of money in the future.