China Flocks to Russian Oil as Middle East Risks Mount
China is rapidly buying up Russian oil, specifically ESPO crude, in response to growing risks to Middle East oil supplies. Typically, Chinese buyers purchase this type of oil weeks after it's needed, but the current pace of sales is significantly faster than usual.
All August-loading cargoes from the Kozmino terminal on Russia's Pacific coast have been sold out, and several shipments for September have also changed hands. This keen buying interest has pushed ESPO prices to a discount of about $1 a barrel compared to ICE Brent, down from $3 to $4 two weeks ago.
The heightened risks to Middle East oil flows are prompting refiners to secure supplies before they're needed, driving the increase in demand for Russian oil. Traders familiar with the market report that Chinese buyers are snapping up ESPO crude at a rapid pace.