Russia’s Far East Crude Price Slumps as China’s State Refiners Cut Imports

The price of Russia’s ESPO crude blend, the flagship grade exported from the Russian Far East, slumped to the lowest level since June 2024 and flipped to a discount to the international benchmark as demand from Chinese state-owned firms has weakened, trading sources told Reuters.

Cargoes of ESPO for April loadings are now being traded at a discount of some $1.50 a barrel against ICE Brent on a delivered basis to China, according to Reuters’s sources.

This discount, the first in 10 months, compares with a premium of about $2 per barrel over ICE Brent at which the ESPO crude sold in China for March loadings, per Reuters data.

The weaker demand from China comes as a result of the reduction or halt of purchases of Russian crude by major Chinese state oil companies and refiners, which avoid sanctioned vessels and shipments.

The state firms began shying away from Russian crude in March and this continues for loadings for April and early May, according to the traders who spoke to Reuters.

While state oil firms in China either halt or reduce Russian oil volumes, at least for now, the independent refiners in China are picking up the slack.

Chinese oil majors have adopted a more cautious approach toward Russian grades following the U.S. sanctions, Emma Li, senior market analyst at Vortexa, wrote in an analysis earlier this month.

“Even when transported via non-sanctioned tankers, their ESPO Blend purchases were limited. Market sources indicate that some state-owned companies have completely halted Russian crude purchases in March after scaling back in February,” Li added.

The independent refiners, for their part, boosted purchases of ESPO and more February-loading cargoes were delivered to the Shandong and Jiangsu provinces, primarily to teapot refiners, Vortexa has estimated. In January, the independent refiners preferred to reduce runs rather than seek alternative barrels amid uncertainties surrounding ESPO supply, Li noted.