The price of Russia’s ESPO Blend crude has exceeded $120 a barrel for the first time since April. The rise is being linked to stronger demand from Chinese refineries against the backdrop of disruptions to oil supplies from the Middle East.
The relevant calculations were published by Reuters.
China has increased purchases of Russian oil due to the risk of a feedstock shortage for local refineries. Supply disruptions, including of Saudi crude, are prompting Chinese buyers to build inventories ahead of the winter season, when fuel demand rises.
According to Reuters, ESPO Blend is now at its most expensive since the first weeks of the war with Iran, which began in late February. The premium for this grade of Russian crude over ICE Brent, one of the world’s main oil price benchmarks, has reached a record $20–30 a barrel.
Meanwhile, the price of Russian Urals crude rose to $110 a barrel this week. The size of the premium depends on the specific cargo and its delivery timing.
Chinese refineries typically buy ESPO one to two months ahead of delivery. However, amid fears of an oil shortage, buyers this time began securing volumes in advance for December loadings.
On Thursday, US lawmakers passed a bill that would allow US President Donald Trump to impose tariffs on imports of Russian oil.
The US is seeking to curb Russia’s revenues, which could be used to finance the war against Ukraine. Potential restrictions could complicate supplies of Russian oil to China and India.
At the same time, traders warn that supply constraints could trigger a further rise in global oil prices, potentially increasing Russia’s revenues from crude sales.
- Oil prices rose after Saudi Arabia halted operations on a major oil pipeline following attacks. This jolted the market and disrupted a route that had played an important role in bypassing the Strait of Hormuz during the war between the US and Iran.