Premiums for ESPO Blend crude oil loading from Russia’s Kozmino port late in July and early in August for delivery into China have held steady with those for shipment earlier this month, four traders said.

They said the premium to ICE Brent was more than $2 per barrel as Chinese buying interest was strong, helped by healthy refining margins, even as competition from Iranian supply has increased.

In June, China’s Iranian oil imports surged to more than 1.8 million barrels per day, according to Vortexa, as shippers accelerated delivery before last month’s 12-day Iran war and demand from independent refineries increased.

ESPO Blend oil loadings in July are planned at 4 million metric tons (some 970,000 bpd), up from 3.6 million tons in June.

An expected decline in exports of Russia’s Sokol oil grade, which is also shipped to China, in July-August as a result of refinery maintenance might also support ESPO prices, one of the traders said. All spoke on condition of anonymity because they were not authorised to speak to the press.

One of the traders said much would depend on Iranian supplies, although another said Chinese refiners would buy EPSO regardless because of its quality and close proximity to Chinese ports.

U.S. President Donald Trump said on Wednesday last week that the U.S. has not given up its maximum pressure on Iran – including restrictions on sales of Iranian oil – but he also signalled a potential easing in enforcement to help the country rebuild.

Last Tuesday, he said China can continue to purchase Iranian oil after Israel and Iran agreed to a ceasefire.
Source: Reuters