According to Bloomberg news agency, the price of key Russian oil ESPO began to fall after Western sanctions forced Chinese refineries to cancel some purchases.
Points of attention
- Previously quoted at a premium, ESPO shipments are now being offered at a discount, showcasing the impact of geopolitical developments on the oil market.
- The abandonment of ESPO oil by Chinese companies highlights the ripple effects of international sanctions on global energy trade.
US sanctions hit both Russia and China
Analysts note that spot ESPO shipments from the Russian Far East were offered this week at a discount of 50 cents per barrel to the ICE Brent benchmark.
What is important to understand is that before the introduction of US sanctions, this variety was quoted at a premium of over $1 per barrel.
It was the restrictions announced by US President Donald Trump that led to disruptions and redistribution of flows.
Since Russian giants Rosneft and Lukoil fell under Washington's sanctions, the situation on the market began to deteriorate rapidly.
It is also worth noting that Trump's decision was made after the EU imposed even tighter restrictions on energy trade with Russia.
It's no secret that ESPO is the favorite grade of both Chinese state-owned refineries and private processors with experience working with sanctioned oil, such as Iranian oil.
Following US sanctions, Chinese state-owned companies, including Sinopec, have canceled some purchases of Russian offshore oil, mainly ESPO.
