Chinese Refiners Rush to Buy ESPO Crude, Premium Hits Record Above $7/Barrel
nashnova research
After the U.S. blocked Iran's seaborne oil exports, Chinese independent refiners pivoted to Russia's ESPO crude, driving the November-delivery premium past $7 a barrel above Brent — a record — with some offers hitting $10. Global crude trade flows are being forcibly redrawn by sanctions.
Why did the ESPO premium spike to a record?
Bloomberg, citing traders, reports November-delivery ESPO crude is now priced at more than $7 above Brent, with some offers as high as $10 a barrel.
This means → buyers are paying far above the global benchmark, a sign that supply-demand has tightened dramatically.
The direct trigger: Washington's maritime blockade on Iranian exports cut off Chinese independent refiners' main alternative supply, forcing a rush into ESPO.
What makes ESPO the go-to replacement?
ESPO — Eastern Siberia–Pacific Ocean pipeline crude — ships from Russia's Far East coast and reaches Chinese buyers in under a week.
In plain terms = once Iranian oil was blocked, Chinese refiners needed a source that was both nearby and accessible. ESPO's logistics edge made it the obvious pick.
The result: concentrated buying surged into one grade, pushing the premium to levels never seen before.
How are China and India competing for ESPO?
Kpler and Vortexa data show China's share of ESPO purchases in the first seven months of this year was 83%, down from 88% a year earlier.
India's share rose from 12% to 16%, absorbing most of what China gave up.
This reflects a shift: ESPO is no longer China's exclusive supply — India is using China's import dips to grab a bigger slice, and the competitive landscape is loosening.
Why is India eyeing ESPO too?
China's overall crude imports dipped in May–June, giving Indian refiners more room to secure cargoes.
At the same time, Middle Eastern supply disruptions delayed Indian refiners' expected long-term contract deliveries, making ESPO a critical backup.
Indian refiners typically prefer Urals crude — another major Russian export grade that is cheaper to ship to India. ESPO takes longer and costs more, so it is an emergency substitute, not a long-term first choice.
How long can this last?
Russia's Kozmino port exported 6% more crude in the first seven months year-on-year, signaling Moscow is ramping supply.
But India's overall Russian crude imports are estimated to have fallen in August — Ukrainian strikes on Russian export infrastructure, plus intensifying Sino-Indian competition, both weighed on volumes.
This means → whether the ESPO premium holds at these heights depends on two variables: how long the Iran blockade lasts and how the China-India tug of war over cargoes shifts.
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