Russia's ESPO Crude Breaks $120, Premium Over Brent Hits Record
nashnova research
Russia's ESPO blend has broken $120 a barrel for the first time since April, with its spot premium over Brent surging to a record $20–30; Chinese state refiners are racing to lock in Russian crude as Middle East supply disruptions threaten winter fuel stocks.
ESPO at $120 — what just happened?
Three traders cited by Reuters say ESPO blend crude — a medium-grade oil shipped from Russia's Far East — has risen above $120 per barrel, the first time since April.
Its spot premium over ICE Brent has hit $20–30 a barrel, a record, varying by cargo lot and delivery window.
This means → a Russian crude grade that normally trades *below* the global benchmark is now trading far *above* it — a sign that supply-demand dynamics have sharply distorted.
Russia's Urals crude also climbed to $110 a barrel this week.
Why are Chinese refiners rushing to buy Russian oil?
The trigger: supply from Saudi Arabia and other Middle Eastern producers has been disrupted by U.S.–Israeli military action against Iran, leaving Chinese refiners exposed to a feedstock shortage ahead of winter heating-fuel season.
In plain terms = the Middle East supply line is suddenly unreliable, so Chinese refiners are pivoting to the nearest alternative — Russia's Far East ports, which are only a short shipping run away.
Chinese state-owned energy companies led the buying spree, locking in most of the November and December loading slots.
Normally Chinese refiners book ESPO one to two months ahead; this time, supply-shortage fears pushed buyers to secure cargoes even earlier.
How did independent refiners get squeezed out?
After state firms swept up the available cargoes, the volume of ESPO left for spot trading shrank sharply.
Small and mid-sized independent refiners — often called "teapot refineries" — have historically been ESPO's core buyers. They are now forced to hunt for crude on global spot markets.
This means → the teapots' spillover buying is transmitting pressure across the global oil market, indirectly pushing up international crude prices.
Can the new U.S. legislation actually curb Russian oil exports?
The U.S. Congress passed a bill on Thursday authorizing President Trump to impose tariffs on countries that buy Russian crude, aiming to cut the revenue funding Russia's war in Ukraine.
If enforced, the measure could affect Indian and Chinese imports of Russian oil.
But several traders flag a contradiction: the restrictions could drive oil prices higher, potentially boosting Russia's export revenue instead.
In plain terms = the sanctions aim to make Russia earn less, but if prices rise as a result, Russia could earn more from fewer barrels — the real-world outcome remains highly uncertain.
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