The expanding pool of Asian buyers is pushing prices higher
Chinese private refineries are jostling with their Indian counterparts for April volumes of seaborne Russian ESPO blend oil, Reuters reported this week, citing industry sources.
After Western customers opted to shun direct purchases of Russian energy exports, China and India have become major buyers of Russian crude.
China, which commonly purchases the entire volumes of the ESPO crude shipped from the Pacific port of Kozmino due to its close proximity, is expected to import record volumes in March.
As for April, Indian independent refiners Reliance Industries and Nayara Energy have reportedly swept up at least five of the roughly 33 cargoes loaded with ESPO crude due to their low prices. That is up from only one vessel for March delivery, its first since buying three cargoes for November 2022.
Prices for April-loading ESPO crude to India were about $5 per barrel below Dubai quotes on a delivered ex-ship (DES) basis, sources familiar with the matter told the agency.
Reuters’ calculations also show that the rising demand has pushed prices for Russian low sulphur ESPO blend bought by Indian refiners above the $60 per barrel cap set by the G7 nations on Russian seaborne crude. China has also been buying ESPO at above the price cap level.
To reduce the risk exposure, importers of Russian oil are using currencies other than the dollar to settle certain niche Russian crudes and are also asking the sellers to handle shipping and insurance.
According to trading sources, competition from India has reduced discounts for April-loading ESPO shipments to about $6.80 per barrel against the June ICE Brent DES basis to northern China from $8.50 a barrel last month for March-loading oil.
Murban crude of similar quality from Abu Dhabi was traded at a premium of around $3.30 a barrel to Dubai quotes on a free-on-board basis, while April-loading Murban crude is about $9 a barrel more expensive than ESPO delivered to China and India.
In March, Russian oil shipments to China are expected to reach an all-time high of nearly 43 million barrels, including at least 20 million barrels of ESPO.
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March 12, 2023 at 05:56PM