Russian ESPO Blend crude loading from Kozmino port in April and early May has surged to a premium against Brent in Chinese and Indian ports, traders said on Friday, as supply shortages caused by the Iran war and a softening of US sanctions on Russian oil fuelled demand.
Prices for Russian oil jumped relative to Brent after the United States allowed Indian buyers, hit by reduced Middle East supply, to purchase Russian crude. The 30-day waiver for Indian buyers was followed by a broader exemption permitting all buyers to import Russian oil loaded from March 12 for one month, four sources told Reuters.
ESPO Blend cargoes loading in April and May were sold at premiums of $2-3 per barrel to ICE Brent in China, according to the sources, a dramatic reversal from discounts of $7-10 per barrel for March-loading cargoes sold earlier.
ESPO Blend, a light sweet crude exported via Russia's Far East Kozmino port, is a key feedstock for Chinese refiners due to its short shipping distance and high quality.
Indian refiners, who rarely purchase ESPO, stepped up buying this month to make up for low feedstock inventories, traders said. One source noted that ESPO's direct route to Asia avoids the Strait of Hormuz, offering cheaper and more reliable freight.
A one-way voyage for an Aframax tanker from Kozmino to China was priced at around $3 million, and for around $6 million to India, one of the sources said, adding that the rates are up, but not as much as in the West. Freight jumped to record highs for Russian oil deliveries from Russian western ports to Asia.
In India, ESPO Blend was sold at around $5 per barrel above dated Brent, two sources said, matching the price for Urals despite ESPO's superior quality.
"If there is no feedstock, the quality doesn't really matter," one of the sources said.
Exports of ESPO Blend from Kozmino in March were close to 1 million barrels per day, nearly matching February volumes and the port's capacity, according to one source.
(Reporting by Reuters in Moscow, Siyi Liu and Chen Aizhu in Singapore, Nidhi Verma in New Delhi, Editing by Louise Heavens)