Freight rates for ESPO Blend crude shipped from the Russian port of Kozmino to China have fallen 50% in early February from mid-January levels as a shortage of tankers following U.S. sanctions on the fleet shipping Russian oil eased, four traders said.

The cost of transporting ESPO Blend from the port in the far east of Russia to terminals in northern China jumped to $6 million to $7.5 million after the U.S. sanctions on January 10, as many vessels involved in shipping from Kozmino were targeted.

Lower rates mean Russian exporters will spend less on freight and earn more for their oil. China is the biggest consumer of ESPO Blend oil, favoured by Chinese refiners, which is loaded from Kozmino and is closer to its terminals.

U.S. sanctions on Russia’s oil industry targeted major oil companies Surgutneftegaz and Gazprom Neft, as well as more than 180 vessels.

The traders said that as more ‘clean’, non-sanctioned, tankers have joined the ESPO market, freight rates have eased to levels of around $4 million to $5 million per route or less.

“The supply chain disruption has eased somewhat, but is not totally resolved as China has largely stuck to the ban on designated vessels that fall outside the waivers”, one said.

Before the latest round of U.S. sanctions, shipping oil from Kozmino to ports in northern China cost less than $1.5 million, and some market participants expect freight rates to fall further in the coming weeks.

“I hope that new vessels will arrive at the end of February and then rates may ease even more,” another trader in the ESPO Blend oil market said.

The shortage of ‘clean’ vessels in January did not lead to significant revisions of oil loading plans from Kozmino.

Shipments of ESPO Blend from Kozmino in January amounted to 3.5 million metric tons (about 850,000 barrels per day), the traders said, compared with an average of 3.8 million tons per month in 2024.
Source: Reuters