According to market sources, all ESPO crude cargoes scheduled for shipment in August from Russia's Kozmino terminal on the Pacific coast have been sold. A significant number of September cargoes have also already found buyers, with transactions reportedly taking place faster than usual.
The increased demand has also affected ESPO crude pricing. Sources noted that ESPO, which traded at a discount of USD 3–4 per barrel to ICE Brent crude two weeks ago, has seen its discount narrow to around USD 1 per barrel following strong buying activity.
Chinese refiners focus on supply security
Market analysts point out that the early purchases differ from ESPO crude's traditional trading pattern. Classified as a light, sweet crude due to its low sulfur content and fluid characteristics, ESPO takes approximately one week to reach China from Kozmino. As a result, buyers have not typically needed to stockpile the crude far in advance.
However, growing uncertainty surrounding oil shipments through the Persian Gulf amid conflicts in the Middle East has prompted refiners to secure supplies by making purchases earlier than usual.
Emma Li, chief China market analyst at Vortexa Ltd., said that major Chinese oil companies, led by Unipec, have intensified purchases of Russian ESPO crude since July. She added that recent developments in the Middle East have further accelerated buying activity for August and September cargoes.
Russian oil flows to China on the rise
The increase in purchases has also been reflected in seaborne oil shipments from Russia to China. According to data analytics firm Kpler, China's imports of Russian crude oil are approaching their highest levels since March, when conflicts in the Middle East affected regional oil supplies.
China has imported approximately 1.4 million barrels per day of Russian crude by sea so far in July.
Meanwhile, a bill under discussion in the United States that proposes imposing additional tariffs on major buyers of Russian oil and natural gas, including China, is also seen as a factor that could accelerate purchases in the short term. Analysts suggest that the prospect of sanctions may encourage Chinese buyers to secure larger volumes of supply earlier than planned.
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