Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Commodity Risk. The Partnership from time to time uses derivatives to manage the risk of commodity price fluctuation. Commodity risk is the adverse effect on the value of a liability or future purchase that results from a change in commodity price. We monitor and manage the commodity market risk associated with potential commodity risk exposure. In addition, we focus on utilizing counterparties for these transactions whose financial condition is appropriate for the credit risk involved in each specific transaction.
We have entered into hedging transactions as of September 30, 2020 to protect a portion of our commodity price risk exposure. These hedging arrangements are in the form of swaps and options for NGLs. We have instruments totaling a gross notional quantity of 645,000 barrels settling during the period from October 31, 2020 through January 31, 2021. These instruments settle against the applicable pricing source for each grade and location. These instruments are recorded on our Consolidated and Condensed Balance Sheets at September 30, 2020 in "Fair value of derivatives" as a current liability of $0.4 million. Based on the current net notional volume hedged as of September 30, 2020, a $0.10 change in the expected settlement price of these contracts would result in an impact to our net income of approximately $2.7 million.
Interest Rate Risk. We are exposed to changes in interest rates as a result of our credit facility, which had a weighted-average interest rate of 4.75% as of September 30, 2020. Based on the amount of unhedged floating rate debt owed by us on September 30, 2020, the impact of a 100 basis point increase in interest rates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $2.1 million annually.
We are not exposed to changes in interest rates with respect to our 2021 Notes, 2024 Notes, and 2025 Notes as these obligations are fixed rate. Based on the market prices of similar debt at September 30, 2020, the estimated fair value of the 2021 Notes, 2024 Notes and 2025 Notes was $27.6 million, $54.4 million and $261.5 million respectively. Market risk is estimated as the potential decrease in fair value of our long-term debt resulting from a hypothetical increase of a 100 basis point increase in interest rates. Such an increase in interest rates at September 30, 2020, would result in no decrease in the fair value of our 2021 Notes, a $1.5 million decrease in the fair value of our 2024 Notes, and a $8.4 million decrease in the fair value of our 2025 Notes.
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