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Chinese refinery bought ESPO at the largest discount of the year

An independent Chinese refinery bought a shipment of Russian ESPO crude at a discount of $7–8 per barrel. Demand fell after U.S. sanctions against Rosneft and Lukoil, which affected purchase volumes.

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Sale and buyer

At least one Chinese buyer purchased a cargo of Russian ESPO crude at the largest discount of the year.

The cargoes were sold at a discount of $7–8 per barrel. The buyer was an independent Chinese refinery known by the nickname "teapot"; this was likely its first purchase since the end of October.

Sanctions and impact

Demand for this grade fell sharply after the US imposed sanctions on Rosneft and Lukoil, which forced some refiners to cut orders.

ESPO remains attractive to Chinese refineries because of its high diesel yield and shorter delivery distance, despite the reduced purchase volumes.

  • On October 22 the US imposed sanctions on Rosneft and Lukoil and urged Moscow to agree to a ceasefire.
  • At the end of October ESPO's price fell after Western restrictions forced Chinese refiners to cancel some purchases.

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