Chinese refiners receive discounts on Russian oil due to sanctions.

Chinese refiners are being offered Russian ESPO oil at reduced prices

From transfers from the Russian port of Kozmino, which are not subject to sanctions, Chinese refiners are being offered Russian ESPO oil at a price of $2 to $3 per barrel compared to the price of $5 or higher offered last month. A limited number of ports and tankers that can handle Russian supplies has increased the delivery cost of ESPO to China, making shipments too expensive for independent refiners. Many state-owned companies are currently holding back from trading ESPO due to risk assessment and consequences.

To continue trading ESPO, buyers and sellers are considering using lesser-known oil reception terminals or transshipping to other tankers, which would reduce government oversight. However, these measures lead to increased costs that most refining companies cannot afford.

Under the administration of former US President Joe Biden, sanctions against the Russian oil industry have been significantly tightened. Restrictions have covered a large part of the tanker fleet servicing the port of Kozmino. The shipping rates for ESPO to China have skyrocketed, and tankers that previously frequently visited western Russian ports are now being deployed to the east.