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Institute For Oil & Gas Training
OGI-1175 New

Hedging & Derivatives for Commodity Price Risk Training Course

Duration
5 days
CPD hours
15
Language
English
Next date
12 Oct 2026
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Overview

Hedging & Derivatives is a critical treasury capability for oil and gas organisations exposed to volatile commodity prices, foreign exchange movements, financing costs, and uncertain future cash flows. The Hedging & Derivatives for Commodity Price Risk Training Course from Institute For Oil & Gas Training develops practical expertise in designing, executing, monitoring, and accounting for commodity hedging programmes across upstream, midstream, downstream, trading, and energy services operations.

Oil and gas revenues and costs are directly influenced by movements in crude oil, refined products, natural gas, and related commodity markets. Price volatility affects production economics, project valuations, operating budgets, cash flow forecasts, debt servicing capacity, inventory values, and investment decisions. Treasury teams therefore require a structured understanding of derivative instruments and risk management techniques that protect financial performance while maintaining appropriate governance and control.

This course provides a practical framework for managing commodity price exposure through crude oil futures, forward contracts, commodity swaps, and put and call options. Participants examine how each instrument operates, where it fits within an oil and gas treasury strategy, and how transaction structures influence liquidity, accounting, collateral, and counterparty exposure.

The programme addresses the complete hedging decision process, from identifying the underlying exposure through selecting an appropriate instrument, establishing a hedge ratio, executing transactions, monitoring market movements, and evaluating hedge effectiveness. It also examines basis risk, contango and backwardation, liquidity considerations, and the operational implications of different market structures.

Particular attention is given to option-based strategies, including the collar strategy, which combines options to establish defined price protection while managing premium costs. Participants develop an understanding of how put and call options affect the risk profile of an organisation and how structured positions should be evaluated before execution.

The course also develops practical capability in mark to market valuation, margin and collateral requirements, derivative settlement, exposure monitoring, and treasury reporting. These disciplines are essential for organisations that use derivatives as part of an integrated commodity risk management framework.

Institute For Oil & Gas Training focuses on the commercial realities faced by corporate treasury, finance, risk, trading, and commercial teams. The course connects derivative theory with operational decisions, enabling participants to assess how hedging decisions affect cash flow, financial reporting, liquidity planning, and corporate risk exposure.

Participants also examine the relationship between physical commodity exposure and financial derivatives. This includes understanding the difference between the benchmark used for a hedge and the actual price received or paid by the business. Such analysis is essential for managing basis risk and ensuring that hedge structures correspond with the organisation's underlying exposure.

Market structure is another important element. Understanding contango and backwardation supports more informed decisions when using futures and forward positions, particularly where exposures extend across multiple delivery periods. Participants assess how changes in the futures curve influence hedge economics, valuation, and expected cash flows.

The programme supports stronger treasury governance by linking hedging activity to documented risk appetite, delegated authority, transaction controls, valuation procedures, collateral management, and performance monitoring. It equips organisations with a consistent approach to managing commodity price risk without treating derivative activity as an isolated trading function.

Objectives

  • Understand the principles of commodity price risk management within oil and gas organisations

  • Apply Hedging & Derivatives techniques to identified crude oil and commodity exposures

  • Evaluate crude oil futures as instruments for managing future price exposure

  • Assess forward contracts and their application to defined physical commodity exposures

  • Understand the structure and commercial application of commodity swaps

  • Evaluate put and call options for commodity price protection and participation

  • Construct and assess a collar strategy for defined commodity price exposures

  • Calculate and interpret an appropriate hedge ratio

  • Identify and manage basis risk between physical exposures and derivative benchmarks

  • Analyse contango and backwardation and their implications for futures-based hedging

  • Understand mark to market valuation principles for derivative positions

  • Assess margin and collateral requirements associated with derivative transactions

  • Monitor derivative positions and their effect on liquidity and cash flow

  • Strengthen treasury controls over commodity hedging activities

  • Improve communication between treasury, finance, commercial, trading, procurement, and risk functions

  • Develop practical approaches to documenting, monitoring, and reporting commodity hedge positions

  • Evaluate the financial and operational consequences of different hedging structures

  • Support disciplined commodity risk management decisions aligned with organisational exposure and treasury policies

Training methodology

Institute For Oil & Gas Training delivers this course through an applied corporate training methodology centred on realistic oil and gas treasury situations. The approach combines expert-led discussion with practical analysis, structured exercises, case studies, transaction simulations, and group-based risk management scenarios.

Participants work through commodity price exposure scenarios involving production revenue, procurement costs, inventory positions, forecast sales, and contracted physical volumes. These scenarios demonstrate how treasury professionals identify exposure and translate operational information into a measurable hedging requirement.

Case studies examine crude oil futures, forward contracts, commodity swaps, and option structures. Participants compare the commercial characteristics of each instrument and evaluate the implications for liquidity, valuation, settlement, counterparty exposure, and financial risk.

Simulation exercises focus on hedge execution and monitoring. Participants assess changing market conditions, determine appropriate hedge positions, review hedge ratios, and evaluate the resulting exposure as market prices move.

Practical exercises also address basis risk. Participants compare benchmark prices with the underlying physical exposure and assess how differences between reference prices influence hedge performance.

Option-based exercises examine put and call options and the construction of a collar strategy. Participants assess premium costs, protection levels, participation in favourable market movements, and the resulting cash flow profile.

Mark to market valuation exercises demonstrate how derivative positions are revalued as market prices change. Participants examine the relationship between market movements, derivative values, cash settlements, and collateral requirements.

Group discussions address governance and treasury controls, including transaction approval, exposure limits, counterparty considerations, documentation, valuation controls, and management reporting. The delivery approach ensures that participants connect financial market instruments with the operational and commercial realities of oil and gas organisations.

Organisational impact

A structured commodity hedging capability strengthens the way oil and gas organisations manage exposure to unpredictable market prices. This course enables sponsoring organisations to establish stronger processes for identifying exposures, selecting appropriate instruments, monitoring positions, and communicating hedge performance.

Improved exposure identification supports more reliable treasury planning. Finance and treasury teams gain a clearer understanding of how production volumes, procurement commitments, inventories, contracted sales, and forecast transactions translate into commodity price exposure.

Better instrument selection strengthens the connection between physical exposure and financial protection. Understanding crude oil futures, forward contracts, commodity swaps, and options helps organisations select structures based on the characteristics of the underlying risk rather than relying on generic hedging approaches.

Effective hedge ratio analysis supports more disciplined risk management. Organisations gain stronger processes for determining the proportion of an exposure that should be hedged and for reviewing whether hedge positions remain aligned with changing operational forecasts.

Improved basis risk management helps treasury teams identify situations where the derivative benchmark does not perfectly match the physical commodity price. This supports more realistic assessments of hedge performance and residual exposure.

Understanding contango and backwardation strengthens futures-market analysis. Treasury and commercial teams can incorporate the shape of the futures curve into hedge evaluation, cash flow planning, and position monitoring.

The course also strengthens liquidity management. Derivative transactions can generate collateral, margin, settlement, and cash flow requirements that need to be integrated into treasury forecasts. Understanding margin and collateral requirements enables organisations to incorporate these obligations into liquidity planning.

Stronger mark to market valuation practices support more transparent financial monitoring. Treasury teams can track the changing value of derivative positions and communicate market exposure more effectively to finance leadership and management.

Improved governance supports controlled execution of hedging transactions. Clearer processes for exposure identification, approval, execution, valuation, reconciliation, and reporting reduce the risk of inconsistent treasury practices.

The programme also promotes cross-functional alignment. Commodity price risk frequently affects commercial, finance, procurement, trading, operations, and executive decision-making. A common understanding of hedging instruments improves communication between these functions.

The sponsoring organisation gains a stronger internal capability to evaluate hedge proposals, monitor active positions, understand liquidity consequences, and report commodity risk to senior management. The result is a more integrated approach to treasury risk management and financial planning.

Personal impact

Participants develop practical knowledge that directly supports treasury and financial risk management responsibilities within the oil and gas sector. They gain a structured understanding of how commodity price exposures arise and how financial instruments are used to manage them.

Treasury professionals strengthen their ability to analyse commodity exposures and translate operational forecasts into measurable hedge requirements. They also gain greater confidence in evaluating crude oil futures, forward contracts, commodity swaps, and options.

Participants improve their understanding of option structures and the commercial application of put and call options. They learn how a collar strategy changes the range of potential commodity prices and how premium considerations influence the overall structure.

The programme strengthens quantitative risk analysis through practical work with hedge ratios, basis risk, futures curves, derivative valuation, and changing market prices.

Finance professionals develop a clearer understanding of mark to market valuation and the financial consequences of derivative positions. This supports better communication between treasury and financial reporting functions.

Participants also strengthen their understanding of liquidity implications. Knowledge of margin and collateral requirements enables them to incorporate derivative-related cash requirements into broader treasury planning.

Risk professionals gain stronger capabilities for assessing residual exposure, monitoring hedge positions, and evaluating whether hedging activity remains aligned with defined risk objectives.

Commercial and trading professionals gain a better understanding of the treasury considerations associated with commodity transactions. This supports stronger coordination between physical commodity activity and financial risk management.

Managers and senior professionals gain a broader perspective on the governance, controls, and reporting requirements associated with commodity hedging programmes. They are better positioned to challenge assumptions, review hedge proposals, and interpret management reports.

Who should attend

  • Treasury Managers and Treasury Professionals — responsible for liquidity, financial risk, commodity exposure, and hedging activity.

  • Finance Managers and Financial Controllers — require an understanding of derivative valuation, financial exposure, and treasury reporting.

  • Commodity Risk Managers — manage commodity price exposure and develop risk mitigation strategies.

  • Risk Management Professionals — monitor market exposure, hedge performance, and residual risk.

  • Oil and Gas Trading Professionals — require stronger knowledge of financial instruments supporting physical commodity positions.

  • Commercial Managers — assess pricing structures, contracts, and commercial exposure to commodity market movements.

  • Financial Analysts — analyse commodity prices, hedge positions, cash flows, and valuation impacts.

  • Corporate Finance Professionals — evaluate commodity price exposure within broader financial planning and funding decisions.

  • Procurement Professionals — manage commodity-linked purchasing exposure and coordinate with treasury risk management.

  • Accounting Professionals — require knowledge of derivative valuation and the financial effects of hedging activity.

  • Senior Treasury and Finance Leaders — oversee commodity risk policies, controls, liquidity, and management reporting.

  • Oil and Gas Executives — require an integrated understanding of commodity price risk and its impact on corporate financial performance.

Course outline

This module establishes the framework for identifying and managing commodity price exposure across oil and gas operations. It examines the relationship between physical commodity positions, financial market exposure, treasury objectives, and organisational risk appetite.

  1. IOSCO Principles

    • Provides internationally recognised principles for financial market regulation and oversight

    • Supports transparent and controlled approaches to market activity and risk management

    • Provides relevant context for organisations dealing with commodity derivatives and financial market participants

    Learning Outcomes

    • Identify major commodity price exposures within oil and gas operations

    • Structure exposure information for treasury analysis

    • Calculate and interpret hedge ratios

    • Identify sources of basis risk

    • Establish a disciplined framework for commodity hedging decisions

This module examines the core derivative instruments used to manage commodity price exposure. It focuses on how crude oil futures, forward contracts, and commodity swaps operate and how their structures affect treasury risk, cash flow, valuation, and settlement.

  1. EMIR

    • Establishes European requirements covering over-the-counter derivatives, central counterparties, and trade repositories

    • Provides an important regulatory reference for organisations operating within relevant European derivatives markets

    • Supports understanding of reporting, risk mitigation, and clearing considerations for applicable transactions

    Learning Outcomes

    • Distinguish between futures, forwards, and commodity swaps

    • Evaluate the suitability of derivative structures for different oil and gas exposures

    • Analyse contango and backwardation

    • Understand the implications of rolling futures positions

    • Assess settlement and counterparty considerations

    • Connect derivative structures with physical commodity exposure

This module develops practical capability in using options to manage commodity price exposure. It examines put and call options and applies them to structured hedging strategies, including the collar strategy.

  1. ISDA Master Agreement

    • Provides a widely recognised contractual framework for many bilateral derivative transactions

    • Establishes contractual provisions governing transactions between counterparties

    • Supports structured documentation and management of bilateral derivatives relationships

    Learning Outcomes

    • Explain the commercial purpose of commodity put and call options

    • Evaluate option premiums and strike prices

    • Construct a collar strategy for a defined commodity exposure

    • Compare option structures with futures and swaps

    • Assess the effect of commodity price movements on option positions

    • Identify key contractual and counterparty considerations

This module focuses on the financial monitoring of derivative positions after execution. Participants examine mark to market valuation, margin and collateral requirements, settlement flows, and the liquidity implications of active commodity hedging positions.

  1. IFRS 13

    • Establishes principles for fair value measurement and related disclosures

    • Provides a recognised framework for measuring financial instruments at fair value

    • Supports consistent valuation and reporting practices for applicable derivative positions

    Learning Outcomes

    • Explain mark to market valuation principles

    • Interpret valuation movements across derivative positions

    • Understand margin and collateral requirements

    • Assess the liquidity impact of derivative transactions

    • Strengthen derivative reconciliation and monitoring processes

    • Communicate valuation and collateral information through treasury reporting

This module integrates the technical and commercial elements of commodity hedging into a controlled treasury framework. It focuses on monitoring hedge performance, reviewing residual exposure, strengthening governance, and ensuring that hedging activity remains aligned with corporate objectives.

  1. IFRS 9

    • Establishes accounting requirements for financial instruments and hedge accounting

    • Provides principles for recognising and measuring applicable financial instruments

    • Includes requirements relevant to hedge relationships and risk management activities

    Learning Outcomes

    • Establish stronger governance over commodity hedging programmes

    • Monitor hedge ratios and residual exposures

    • Evaluate hedge performance using relevant market information

    • Strengthen controls over derivative transactions

    • Integrate commodity hedging with liquidity planning

    • Improve treasury reporting to management

    • Coordinate commodity risk management across treasury, finance, commercial, trading, and procurement functions

    • Apply a structured approach to ongoing hedge monitoring and review

Certificate

Attendees receive a Certificate of Completion from Institute For Oil & Gas Training upon finishing the course.

The Certificate of Completion is issued to participants who meet the course attendance requirement and complete the scheduled programme.

Course dates

  • Europe

    Middle East

    Asia

    Africa

    North America

    Online

    Fee: £4,400

  • Europe

    Middle East

    Asia

    Africa

    North America

    Online

    Fee: £4,400

  • Europe

    Middle East

    Asia

    Africa

    North America

    Online

    Fee: £4,400

  • Europe

    Middle East

    Asia

    Africa

    North America

    Online

    Fee: £4,400

Fees include tuition, course materials and refreshments. Need different dates or a different city? Ask about your preferred date.

Frequently asked questions

What does the Hedging & Derivatives for Commodity Price Risk Training Course cover?

The course covers commodity price exposure, crude oil futures, forward contracts, commodity swaps, put and call options, collar strategy design, hedge ratios, basis risk, valuation, collateral, liquidity, and treasury governance.

Who is this course designed for?

The programme is designed for treasury, finance, commodity risk, commercial, trading, procurement, accounting, financial analysis, and corporate finance professionals working with oil and gas commodity exposure.

How is the course delivered?

Institute For Oil & Gas Training uses corporate case studies, practical exercises, market scenarios, simulations, structured discussions, and group exercises focused on real-world oil and gas treasury situations.

Will participants learn about commodity options?

Yes. Participants examine put and call options, option premiums, strike prices, price protection, participation in favourable market movements, and the construction and evaluation of a collar strategy.

What skills will participants gain from the course?

Participants develop practical skills in commodity exposure analysis, hedge ratio assessment, derivative selection, basis risk analysis, futures market evaluation, mark to market valuation, margin and collateral monitoring, liquidity planning, and hedge governance.

Next: 12 Oct 2026

4 dates available

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