China, the world’s biggest oil importer, has bought nearly all of the cargoes of Russia’s ESPO Blend crude oil ESPO-DUB loading from the Far East port of Kozmino in September and October, according to traders and Refinitiv Eikon data.

In September, 2.3 million tons of ESPO, a light crude valued by refiners for its high yield of diesel fuel, were sent to China, with the exception of one cargo of 100,000 tonnes shipped to Sri Lanka.

In October, deliveries of ESPO to China are set to exceed 2 million tonnes, but shipment data is still being updated and actual deliveries may be higher, said four traders who participate in the market.

India, which was actively purchasing ESPO Blend oil in the summer, stopped importing the grade in September because of rising prices for Russian oil and higher transport costs.

Independent oil refiners located in China’s Shandong province prefer buying ESPO because the area’s proximity to Kozmino. Shipments of the grade to Chinese ports takes just a few days, while freight costs are much lower compared to cargoes shipped from the Middle East or the United States.

It costs around $1 million to fix Aframax tanker from Kozmino to most Chinese ports. For India, the cost of ESPO Blend transport is at least three times higher, the traders said.

The price for seaborne ESPO Blend oil has risen significantly since the beginning of summer, when the discount fell to a record of about $22 per barrel below the Middle East benchmark Dubai.

ESPO has recovered since then due to firm demand from Indian and Chinese buyers. October cargoes of ESPO Blend traded close to parity with Dubai, while November volumes were sold slightly cheaper, at a discount of about $2 per barrel to Dubai, according to two of the traders.

India has become one of the main importers of seaborne Russian oil this year, but is mostly focused on Urals. India’s imports accounted for about 30% of all maritime deliveries of the Russian Urals in August.
Source: Reuters (Reporting by Reuters; Editing by Christian Schmollinger)