After Trump's sanctions, Russian ESPO crude oil became cheaper than Brent

The price of a key Russian crude oil grade has fallen after Western sanctions forced Chinese refiners to cancel some purchases. ESPO, which is shipped from Russia's Far East, was offered this week at a 50-cent-per-barrel discount to the ICE Brent benchmark. This was reported by Bloomberg.

The oil market is on alert for possible supply disruptions and changes in flows after the US blacklisted Russian companies Rosneft and Lukoil, increasing pressure on Moscow to end the war in Ukraine.

According to traders, ESPO sales this week were offered at a discount of 50 cents per barrel, compared to last week before the sanctions, when the grade was trading at a premium of more than a dollar per barrel.

ESPO is in demand among both Chinese state-owned refineries and private refiners. After the imposition of US sanctions, Chinese state-owned companies, including Sinopec, canceled some of their purchases of Russian offshore oil, mainly ESPO.

Private refineries are buying about 800,000 barrels per day of Russian crude from the Far East, including ESPO, Sokol, and Sakhalin Blend. According to the analytical company Vortexa Ltd., this demand "will remain stable.".

• on October 22, US President Donald Trump said that during his meeting in South Korea with Chinese leader Xi Jinping he would urge him to stop buying Russian oil .
• The US on October 22 imposed sanctions against major Russian oil companies and called on Moscow to immediately agree to a ceasefire.
• On October 23, Chinese state-owned oil companies suspended purchases of Russian oil, transported by sea, after the US imposed sanctions.