Pricing disputes between buyers and sellers as Western sanctions have complicated trade in Russian oil are expected to delay sales of the Far East oil grade ESPO Blend ESPO-DUB on which China relies, traders said on Tuesday.

The difficulties with ESPO add to the problems of trading other Russian oil, including Urals flagship blend, as Western sanctions make it hard to finance deals.

Almost none of the ESPO Blend cargoes for loading in May has been offered so far, when normally the trading cycle for the grade should have been completed by around this time of the month, they said.

Asian buyers can legally trade Russian oil, but the United States has banned it following Russia’s invasion of Ukraine, while the European Union is divided over a possible embargo.

Russian ESPO crude exports from the Far East port of Kozmino, at 754,000 barrels per day in April, have been China’s primary source of oil on the short-term spot market.

There is still a gap of $5-$10 per barrel between offers and bids, traders said, which makes it difficult to agree on a deal.

One source at a Russian oil producer, who asked not to be named because of the sensitivity of the issue, said he had received bids as low as a discount of $30 per barrel.

Two other sources said sellers lowered their offers for May-loading cargoes to discounts of about $15 per barrel to Dubai quotes on a free-on-board basis – the widest discount yet for the grade that normally trades at premiums of $3-$5 per barrel.

A senior trade executive in Singapore said it was hard to know “where the actual market is”, predicting available cargoes would find homes, but all into China, which has refrained from any sanctions on Russia.

Russian oil producers have adjusted their payment mechanisms for ESPO crude in order to continue with their purchases.

Chinese independent refiners that typically buy from traders on delivered basis have also worked out ways of paying for Russian oil imports.
Source: Reuters (Reporting by Florence Tan; editing by Barbara Lewis)