China Pays Record Premiums for Russian Oil Amid US Sanctions

Chinese refiners are paying a significant premium for Russia's ESPO crude in an effort to replace Iranian oil imports that were disrupted by the US naval blockade. According to Bloomberg, prices for ESPO crude with delivery in November have reached as high as $10 per barrel above Brent crude, with premiums exceeding $7 per barrel.

China is the largest buyer of ESPO crude, accounting for 83% of total sales in the first seven months of the year. However, this share has decreased from 88% in the previous year due to increased demand from Indian refiners, who have taken advantage of supply disruptions in the Middle East and China's own oil import slump.

Indian refiners typically prefer the Urals blend but are now turning to ESPO as a backup option during times of disruption. Despite being more expensive and taking longer to reach their destinations, ESPO has become an attractive choice for Indian buyers.