Rising Chinese demand puts ESPO Blend at a premium to Brent

ESPO Blend oil, from Russia's Far East, has seen its price rise due to strong Chinese demand, crowding out Indian buyers.

Share:

Gain full professional access to energynews.pro from 4.90$/month.
Designed for decision-makers, with no long-term commitment.

Over 30,000 articles published since 2021.
150 new market analyses every week to decode global energy trends.

Monthly Digital PRO PASS

Immediate Access
4.90$/month*

No commitment – cancel anytime, activation in 2 minutes.

*Special launch offer: 1st month at the indicated price, then 14.90 $/month, no long-term commitment.

Annual Digital PRO Pass

Full Annual Access
99$/year*

To access all of energynews.pro without any limits

*Introductory annual price for year one, automatically renewed at 149.00 $/year from the second year.

ESPO Blend, a crude oil of Russian origin extracted from the Far East, is experiencing a significant rise in price, reaching a premium over Brent for the first time since November 2023.
This increase is directly linked to a recovery in demand from Chinese refineries. Cargoes destined for China in November are now trading at a premium of between $0.20 and $0.50 per barrel, depending on the terms of the agreement and delivery dates, according to several market sources.
The increase comes after a period when ESPO Blend was sold at a discount, facilitating purchases by Indian refiners.
The main attraction of ESPO Blend for Chinese refiners lies in its geographical proximity, which reduces transport costs, and its composition, which is suited to the production of petroleum products in demand in Asia.
However, recent market fluctuations, marked by sluggish Chinese demand in the middle of the year, had enabled India to temporarily fill the gap, increasing its purchases.
This change in situation shows just how sensitive the Asian oil market is to adjustments in demand from the main regional players.

Chinese refineries: key players in demand

Chinese refineries, especially the independent “teapots”, are major buyers of ESPO Blend, attracted by its quality and low logistics costs.
The return of Chinese demand has been amplified by the entry into production of new capacities.
For example, Yulong Petrochemical, a recently commissioned private refinery, launched a new 200,000-barrel-per-day processing unit in September 2024.
Even before its start-up, the company had already built up significant stocks of Russian oil, helping to keep pressure on prices.
China’s major oil companies are also increasing their purchases.
Unipec, Sinopec’s trading arm, has secured around 10 cargoes of ESPO Blend for delivery in October, according to a trading source based in Shandong province.
This sustained demand from the big players in the Chinese market leaves fewer opportunities for smaller, independent refineries, which are struggling to keep up with the pace imposed by these industry giants.

Logistics costs at the heart of transactions

Low transportation costs remain a key factor in Chinese refineries’ interest in ESPO Blend.
Freight for a trip to China remains competitive, costing around $1.35 million in September 2024, according to data from Simpson Spence Young.
This logistical economy makes ESPO Blend particularly attractive to refineries, especially as global energy costs remain volatile.
On the other hand, Indian refineries, which took advantage of the summer price drop to increase their purchases, are no longer prepared to pay current prices.
The additional cost of transport to India, combined with the premium charged for ESPO Blend, makes this oil less attractive to Indian refiners, who are now looking for alternatives from West Africa.
India, which has been one of the main importers of Russian oil since the introduction of international sanctions against Moscow, thus favors other grades of crude, notably Urals, which is richer in diesel.

A dynamic, constantly evolving market

The recent upturn in Chinese demand for ESPO Blend demonstrates how quickly market dynamics can change, influenced by the supply strategies of major players.
China, with its growing appetite for crude oil, continues to dictate regional trends, forcing other importing countries to adapt to these developments.
India, although a major consumer of Russian crude, is now having to adjust its supply strategies in the face of less favorable market conditions.
The ramp-up of new refining capacity in China, combined with stable logistics costs, should keep demand for ESPO Blend at high levels in the months ahead.
However, market players will be keeping a close eye on price trends, as any further fluctuations could once again reshuffle the cards in the Asian oil industry.

Russia plans to ship 2.1 million barrels per day from its western ports in September, revising exports upward amid lower domestic demand following drone attacks on key refineries.
QatarEnergy obtained a 35% stake in the Nzombo block, located in deep waters off Congo, under a production sharing contract signed with the Congolese government.
Phillips 66 acquires Cenovus Energy’s remaining 50% in WRB Refining, strengthening its US market position with two major sites totalling 495,000 barrels per day.
Nigeria’s two main oil unions have halted loadings at the Dangote refinery, contesting the rollout of a private logistics fleet that could reshape the sector’s balance.
Reconnaissance Energy Africa Ltd. enters Gabonese offshore with a strategic contract on the Ngulu block, expanding its portfolio with immediate production potential and long-term development opportunities.
BW Energy has finalised a $365mn financing for the conversion of the Maromba FPSO offshore Brazil and signed a short-term lease for a drilling rig with Minsheng Financial Leasing.
Vantage Drilling has finalised a major commercial agreement for the deployment of the Platinum Explorer, with a 260-day offshore mission starting in Q1 2026.
Permex Petroleum has signed a non-binding memorandum of understanding with Chisos Ltd. for potential funding of up to $25mn to develop its oil assets in the Permian Basin.
OPEC+ begins a new phase of gradual production increases, starting to lift 1.65 million barrels/day of voluntary cuts after the early conclusion of a 2.2 million barrels/day phaseout.
Imperial Petroleum expanded its fleet to 19 vessels in the second quarter of 2025, while reporting a decline in revenue due to lower rates in the maritime oil market.
Eight OPEC+ members will meet to adjust their quotas as forecasts point to a global surplus of 3 million barrels per day by year-end.
A key station on the Stalnoy Kon pipeline, essential for transporting petroleum products between Belarus and Russia, was targeted in a drone strike carried out by Ukrainian forces in Bryansk Oblast.
The European Union’s new import standard forces the United Kingdom to make major adjustments to its oil and gas exports, impacting competitiveness and trade flows between the two markets.
The United Kingdom is set to replace the Energy Profits Levy with a new fiscal mechanism, caught between fairness and simplicity, as the British Continental Shelf continues to decline.
The Italian government is demanding assurances on fuel supply security before approving the sale of Italiana Petroli to Azerbaijan's state-owned energy group SOCAR, as negotiations continue.
The Dangote complex has halted its main gasoline unit for an estimated two to three months, disrupting its initial exports to the United States.
Rosneft Germany announces the resumption of oil deliveries to the PCK refinery, following repairs to the Druzhba pipeline hit by a drone strike in Russia that disrupted Kazakh supply.
CNOOC has launched production at the Wenchang 16-2 field in the South China Sea, supported by 15 development wells and targeting a plateau of 11,200 barrels of oil equivalent per day by 2027.
Viridien and TGS have started a new 3D multi-client seismic survey in Brazil’s Barreirinhas Basin, an offshore zone still unexplored but viewed as strategic for oil exploration.
Taiwan accuses China of illegally installing twelve oil structures in the South China Sea, fuelling tensions over disputed territorial sovereignty.

Log in to read this article

You'll also have access to a selection of our best content.