Hedging lossesIf you BUY a "PUT" hedge contract for 2023 which gives you the right to SELL oil at $47, for example, this protects you from downside risk if the price falls below $40. The gain or loss is only realized if you SELL TO CLOSE that contract In other words this is a form of insurance against a worst case scenario. If you SELL a CALL for 2023 at $60, for example, you receive the price of that call but you have given up any upside above that price. The loss is only a paper loss until you actually close out that contract with a BUY TO CLOSE, which creates a cash gain or loss.Those who criticize ARX hedging performance should also look at the context when these hedges were put in place ie debt, covid, contemporary commodity prices, blah, blah, blah The transaction only becomes a real cash gain or loss when the contract is closed out. Up to that point the paper gain or loss is subject to the daily fluctuations of the market for that commodity.