Fighting oil volatility

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With the possibility of a war in Iraq looming combined with the Organisation of Petroleum Exporting Countries’s (Opec) decision to freeze its level of oil output, risk managers are faced with an oil price hedging dilemma. These events, combined with a tightening of global stocks, have led many traders and mass consumers of oil to change hedging strategies as possible protection against a repeat of the 1991 Gulf War scenario, where the price of oil rose to a high of $34.20 a barrel (s