Freight rates for ESPO Blend crude shipped from the Russian port of Kozmino to China fell to $1.9 million, the lowest level since December 2024 on higher availability of tankers and lower June exports, three traders said on Thursday.
Lower rates mean Russian exporters will spend less on freight and earn more for their ESPO oil, which has recently firmed to the ICE Brent benchmark in China.
Freight rates on the route have fallen below $1.9 million for July-loading cargoes for a one-way trip on an Aframax vessel that is able to carry 750,000 barrels. That is down from $2 million-$3 million for April-loading volumes as more non-sanctioned tankers have joined the ESPO market, the traders said.
Lower ESPO Blend oil exports in June also helped reduce freight rates, traders said. June exports dropped to 3.6 million tonnes (or 900,000 barrels per day) due to maintenance, from 4.2 million tonnes in May.
The cost of transporting ESPO Blend to China jumped to $6 million-$7.5 million after US sanctions were placed on vessels involved in Russian oil shipments on January 10, as many vessels working at Kozmino port were targeted.
US sanctions on Russia's oil industry targeted major oil companies Surgutneftegaz and Gazprom Neft, as well as more than 180 vessels.
Before the latest round of US sanctions, shipping oil from Kozmino to ports in northern China used to cost less than $1.5 million. Traders said those levels might be achieved again this year if no additional restrictions on Russian oil transportation emerge.
(Reporting by Reuters in Moscow; additional reporting by Siyi Liu in Singapore; Editing by Susan Fenton)