Russian ESPO Crude Prices To China Rise To Highest Since Pre-Ban

Prices of Russia's ESPO Blend crude oil shipped to China have risen to the highest level since the start of the EU embargo on Russian crude oil in December because of higher Russian demand amid Russia’s pledged export cuts for August according to Reuters.

• Russian light sweet crude loaded at the Pacific port of Kozmino for August-delivery to China traded at a discount of $4/bbl against ICE Brent futures on a DES basis, compared with a discount of $6/bbl for July cargoes, traders said.
• Russian ESPO prices received support from Russia’s pledged export cut of 500kbpd in August and anticipated lower exports in July as local refiners ramp up production after maintenance season.
• "The price increase comes as the private refiners in China have just received new crude imports quotas. They are now out for shopping and Russian oil remains relatively cheap," said one trader.
• "Russian output is indeed being cut and there are more Chinese buyers", said a second trader.
• Strong bids from Indian refiners are also helping push up prices for China, three other traders said.
• ESPO price gains are likely to slow down soon as the grade is likely to become less economical than other sanctioned barrels such as Iranian crude which has been trading at a discount of around $12/bbl to ICE Brent to China in recent months, a trader said.