China Ramps Up Russian Oil Purchases Amid Middle East Supply Risks

Chinese refiners are accelerating their purchases of Russian oil from the Far East port of Kozmino, buying up all available cargoes for August weeks earlier than usual. This move is attributed to growing concerns over Middle Eastern supply risks after recent attacks on tankers in the Red Sea.

The price of Russia's Far Eastern crude blend ESPO has increased, now trading at a discount of just $1 per barrel to ICE Brent, up from a discount of between $3 and $4 per barrel two weeks ago. This tightening of supply from the Middle East has driven prices higher, with Brent crude reaching $100 per barrel this week.

China's refiners are opting for Russia's ESPO crude due to its shorter journey time to import terminals on China's east coast, which takes just a week. The Strait of Hormuz remains largely closed following Iranian attacks, and the Iran-aligned Houthis in Yemen have targeted tankers in the Bab el-Mandeb Strait.