Richard Southern KC has updated Oil & gas: case law review, hedging losses – a Practical Law UK practice note which reviews the case law on the recoverability of hedging losses under crude oil sale agreements.

Richard Sarll is the joint editor of the note which looks at the index-based pricing mechanisms commonly used in crude oil sale agreements which may expose the parties to risk as the market price for oil fluctuates. The parties often use derivative contracts to hedge (mitigate) against this risk. However, where performance under the sale agreement is delayed (for example, the seller fails to deliver the oil), this can lead to losses for the hedging party (hedging losses). This note explains how hedging losses can arise and considers the recoverability of hedging losses in the law of damages.

The article has been published on Thomson Reuters, Practical Law’s website.

To view a copy of the article please click here.