Home / Oil & Energy / Oil & Companies News / Russia’s Far East ESPO Blend oil slips to wider discounts in China amid weak demand

Russia’s Far East ESPO Blend oil slips to wider discounts in China amid weak demand

Russia’s Far East ESPO Blend oil ESPO-DUB slipped to wider discounts against Brent in Chinese ports for May and June cargoes, as Chinese refiners’ demand for the grade cooled, while supply of the grade remained high, three traders involved in ESPO Blend oil market said on Friday.

Some ESPO Blend oil cargoes loaded in the end of May and early in June were still on offer, while the grade normally trades in advance and July-loading cargoes are expected to be offered soon, two of the traders said.

ESPO Blend oil cargoes loading in May and June were offered at ICE Brent minus $1-1.50 per barrel, down from an estimate of Brent flat to $0.50-per-barrel discount a month earlier, traders said.

May ESPO Blend oil exports are planned at 3.8 million metric tons (some 920,000 barrels per day), little changed from April loadings, according to an industry source familiar with the plan.

ESPO Blend oil exports from Kozmino remain high, close to the port’s capacity, as the route offers better profit for Russian oil companies than western ports due to the short distance to the Asian market, one of the traders said.

Chinese teapots, main buyers of Russian ESPO Blend, showed lower demand for the grade amid weak refining margins, while freight and payments issues for Russian oil also weighed on the market, according to one of the traders.

Russia and China have been rising trade cooperation, but the issues with transactions for oil and other goods remain in place as Chinese banks are raising requirements to approve such deals to offset secondary sanctions risks.

A decline in ESPO Blend oil prices supported demand from India with at least three cargoes of the grade flowing to Indian ports in May, according to the traders.
Source: Reuters (Reporting by Reuters reporters in MOSCOW and Florence Tan in SINGAPORE; Editing by Vijay Kishore)

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