The price of Russian ESPO Blend crude oil jumped above $120 per barrel for the first time since April amid demand from Chinese refineries, as the U.S.-Israeli war against Iran disrupts supplies from the Middle East. This was reported by three traders and is evidenced by Reuters calculations, writes UNN.
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China increased its purchases of Russian oil as disruptions, particularly involving Saudi crude, threatened to leave Chinese refineries without feedstock ahead of the winter season, when demand for heating fuel rises..
Although the absolute price of ESPO is the highest since the first weeks of the war in Iran, which began in late February, the premium for ESPO Blend over ICE Brent, used as the trading benchmark for pricing physical cargoes, reached a record $20–$30 per barrel, according to an analysis of Reuters data.
Prices for Urals crude also reached $110 per barrel this week.
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The size of the premium varies depending on each specific cargo and delivery schedule.
Chinese refineries typically purchase ESPO one to two months in advance, as the transportation distance from Russia’s Far East is short; however, market concerns about limited supplies prompted buyers to secure December loading schedules in advance.
Chinese state-owned energy companies led the purchases and secured most of the volumes for November and December.
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