Record Price Premiums Sparked by China's Rush for Russian Crude
Chinese refiners are intensifying their purchases of Russian crude oil as supplies from the Middle East and Iran dwindle. The rush for Russia's Far East ESPO Blend crude has driven premiums to record highs, with November delivery prices climbing over $7 per barrel above ICE Brent.
The strong demand is being led by Chinese state-owned refiner Sinopec, which is seeking alternative supplies due to concerns over disruptions to shipments through the Strait of Hormuz. The US and Iran exchanged strikes overnight, fueling fears of further supply disruptions and reducing expectations for a near-term easing of tensions.
Traders said that lower availability of Iranian crude has contributed to the surge in demand for ESPO Blend, which is prized by Chinese refiners for its proximity and relatively short shipping times. As a result, most November-loading cargoes have been sold well ahead of schedule, underscoring robust Chinese demand.
Market participants expect premiums to remain elevated as long as uncertainty over Middle Eastern supplies and Iranian exports persists.