Based On The Financial Derivatives Of Oil Price Risk Management Research

Since the1970s oil crisis, oil prices began to volatility, the oil market riskmanagement is increasingly important. This paper studys how to manage the risk of oilprice with hedging, to avoid the risk of crude oil imports, either from the economicinterests or national security considerations, as a large number of oil-importing country,there is a great significance.Firstly, from the status of China’s oil market and price risk characteristics departure, onChina’s current oil supply and demand conditions, and some problems such as externaldependency to discuss, make suggestion for our country’s petroleum strategy. Then thefinancial derivatives and risk management are summarized, and compared the characteristicof different derivatives, explaining the reason of hedging to avoid oil price risk. As for therisk measurement tools, this paper choose the value at risk (VaR) method. However,because of the quasi-financial attributes of oil, the time sequence has obvious spikes andvolatility clustering effect of the tail, so we use GARCH model to deal with, you canreceive good results. On the choice of hedging ratio, this article selects the minimumvariance hedging ratio and dynamic hedging based on GARCH model compared to themethod, and comparing their hedging effect, and provide reference for petroleum enterprisemanage ent’s own risk.