NEW YORK: Mexico has asked top Wall Street banks to submit quotes for its giant oil hedging program, sources familiar with the matter said on Friday, while trading in crude oil options has increased this week ahead of the megadeal.

The finance ministry has asked banks for price quotes, one source with direct knowledge of the matter said, signalling the beginning of the process to execute the hedge. The ministry was not immediately available for comment.

Every year, Mexico buys as much as $1 billion in financial contracts, the world's largest oil hedge program, to protect its oil revenues. Bankers and officials on both sides of the deal expect a smaller hedge this year because the options used to protect oil profits are more expensive than last year. The oil market crashed earlier this year, with the US crude benchmark falling to negative-$40 a barrel in April. It was trading around $43 on Friday.

Having the hedge in place protected Mexico from the plunge. The 2020 hedge, arranged in 2019, was completed at $49 a barrel, according to the country's finance ministry, and Mexican President Andres Manuel Lopez Obrador said in April that the hedge would yield roughly 150 billion pesos ($6 billion). Because volatility is higher this year, Mexico is expected to pay more for less coverage for the insurance policy for 2021.