Perspectives
Macquarie Commodities and Global Markets’ (CGM) Benjamin Davis and Andrew Kim, London-based Co-Heads of Global Oil, speak to Risk.net as part of CGM being awarded Oil and Products House of the Year at the 2026 Energy Risk Awards.
The following article was reproduced under licence from Energy Risk.
17 June 2026
“It’s been an interesting time for the oil market,” says Benjamin Davis, CGM’s Co-Head of Global Oil, reflecting on recent geopolitical events, including the overthrow of Venezuela’s leader in January 2026 and the ongoing Middle East conflict.
“We are living through [a time when] headlines can affect the market in ways that are hard to predict,” he continues. “Historically, we advise clients based on macro themes over time, but the unpredictability of the market means that that’s slightly more difficult at the moment.”
As a result, CGM has focused on helping clients manage the worst aspects of volatility, such as steep and unexpected margin calls and illiquid markets, whilst enabling them to benefit from any pockets of upside. To achieve this requires not only the specialist expertise of CGM’s trading teams around the world, but also its physical footprint.
Our global presence in physical chains gives us comfort when the paper market may not be there. We can take our own views and provide liquidity even when others may not be able to because we have this deeper knowledge.”
Benjamin Davis
Co-Head of Global Oil
Commodities and Global Markets
For example, last year CGM developed a bespoke domestic Ultra-Low Sulfur Diesel (ULSD) product for a large consumer client who traditionally hedged using Nymex ULSD futures. The US team structured a derivatives transaction that matched the client’s physical settlement price to avoid basis risk. Historic pricing, regression tools and other analytics help the team get comfortable with warehousing risk in order to provide clients with more precise hedges.
Our broad reach across our franchise also means we sometimes have natural flows that can offset some of the illiquid risks we take on.”
Andrew Kim
Co-Head of Global Oil
Commodities and Global Markets
Despite strong refinery margins over the past 18 months, Kim says some refiners have been reluctant to hedge due to the risk of capping upside potential when geopolitical uncertainty causes sudden price spikes. Macquarie’s European team structured basket options for two refiners to address this issue. “They get a put strike above their break-even level, and we set a core strike to pay for that put quite a bit higher so they are able to participate in the upside across their full margin,” Davis explains. “This is not an option you can just go back to the market to de-risk; you have to manage that over the life of the product.”
Kim agrees that the product “entails a bit of leg work” in this respect. “This type of complex basket option has dynamic risk as the various components move during the life of the deal,” he says. CGM prices the product and manages the risk over its lifetime using its quantitative analytics platform and “a lot of academic and interesting discussions with our various teams,” Kim adds. The product was inspired by refinery client concerns. “We ask clients to tell us about their problems,” Davis says. “And, based on our expectations of what’s going on in the market and their existing positions, we always try to help them.”
Recent market conditions have meant that CGM has restructured more deals than executed new hedges. For example, reduced flight schedules due to the Middle East conflict have left some airlines with hedges they don’t need.
“We can help them use the mark to markets on those hedges to, in effect, smooth out some of their earnings in the upcoming peak period, when they’ll probably be flying more. It’s about having engaged discussions constantly, not just looking at the day one hedge and leaving it alone. We can then restructure hedges to suit client needs, and that flexibility is extremely useful and powerful.”
Macquarie Group was named Oil and Products House of the Year at the 2026 Energy Risk Awards.
