Russia's ESPO crude premiums surge as Chinese buyers seek alternatives to Middle East oil, sources say

China Petroleum and Chemical

02/09/2026 17:05

ESPO cargoes for end-October, November delivery above $7/bbl premium to ICE Brent
Offers heard as high as record +$10/bbl on delivered basis into China, traders say
Chinese refiners turning to Russian grades due to Middle East tensions
MOSCOW/SINGAPORE, Sept 2 (Reuters) - Premiums for Russia's Far East ESPO Blend crude for November delivery to China have climbed to record highs as Chinese refiners intensify purchases amid shrinking supplies from the Middle East and Iran, four traders said.
ESPO cargoes for delivery at the end of October and in November are trading at premiums of more than $7 a barrel to ICE Brent, with offers heard as high as a record plus $10 a barrel on a delivered basis into China, according to the traders.
The buying spree has been led by Chinese state-owned refiner Sinopec, signalling strong demand for alternative crude supplies as concerns persist over disruptions to shipments through the Strait of Hormuz, traders said.
Chinese refiners have increasingly turned to Russian grades as tensions in the Middle East threaten regional oil flows. 
Oil prices rose nearly 1% in early trade on Wednesday after the United States and Iran exchanged strikes overnight, fuelling fears of further supply disruptions and reducing expectations for a near-term easing of tensions.
The strong appetite for ESPO has already resulted in most November-loading cargoes being sold well ahead of schedule, traders said, underscoring robust Chinese demand.
     
LOWER AVAILABILITY OF IRANIAN CRUDE
November ESPO cargoes began trading this week, with premiums on deliveries to China's independent refiners, known as teapots, surging to as much as $10 a barrel on a delivered basis, the traders said.
The rally marks a sharp turnaround from earlier this summer, when ESPO Blend cargoes traded at discounts to ICE Brent. October cargoes have since returned to premium territory as demand strengthened.
Traders said the latest surge has been driven in part by lower availability of Iranian crude, traditionally the largest source of imports for Chinese teapot refiners. 
Supplies tightened after the U.S. resumed a naval blockade in mid-July, forcing buyers to seek replacement barrels.
As a result, ESPO Blend, prized by Chinese refiners for its proximity and relatively short shipping times, has emerged as one of the main beneficiaries of the shift in crude buying patterns.
Market participants said premiums are likely to remain elevated as long as uncertainty over Middle Eastern supplies and Iranian exports persists.

 (Reporting by Reuters in MOSCOW, Aizhu Chen and Siyi Liu in SINGAPORE; Editing by Jan Harvey)