China is buying Russian ESPO crude at a price higher than ICE Brent.

Chinese oil refineries are actively buying Russian ESPO crude and even competing with each other for supplies, Bloomberg reports. This grade is now sold in China not at a discount, as was previously the case, but at a significant premium over the exchange price of the benchmark ICE Brent crude.

In some cases, the premium for weekly delivery shipments has reached $12 per barrel, the highest since late April. Brent futures are currently trading around $94 per barrel. Consequently, Russian crude is selling for over $100 per barrel in China.

This surge in demand for Russian crude is due to several factors. One is the decline in imports to China from Iran and other Middle Eastern countries. Problems with Russian oil exports from ports in the southwest and northwest of Russia are also contributing.

The increase in demand and prices for Russian oil from Chinese refineries is also driven by increased refining profitability in China due to rising gasoline and diesel prices within the country.

Everything seems fine, but, as always, there are nuances. ESPO crude oil is delivered via the East Siberia–Pacific Ocean (ESPO) pipeline system to the Kozmino seaport. This is a specialized terminal in Kozmino Bay in Nakhodka Gulf, Primorsky Krai. The crude is then shipped primarily to India and China by sea tankers.

Exports of ESPO crude oil are approximately half those of Urals. Due to the later start of projects and a smaller resource base, ESPO production volumes are currently significantly lower than those of the blended Urals grade, which is also the base grade for calculating the mineral extraction tax (MET). This is one of the main sources of revenue for the Russian federal budget from oil production, rather than the market-driven increase in export prices.

Comments

[YOU]

Oh, this oil! There's been so much talk about reducing dependence on hydrocarbon exports. And yet, it still represents a significant portion of budget revenue.

[Atheist]

How much was said about reducing dependence on hydrocarbon exports?

This was a complete lie. In fact, the Russian Federation's budget is formed annually based on the expected oil price. Draw your own conclusions.

[Evgeny64]

And which countries' budgets are formed without

The Russian Federation's budget is formed taking into account the expected price of oil

Well, except for some countries in Africa with a primitive communal system.
This is what it seems like

riding on the ears

Well, and accordingly about the commentary in general

Draw your own conclusions

kind of threw it at the fan, with a meaningful look

[Atheist]

Tell your wife, dude. For the first part of the question: China, India, Japan, Germany, France, Britain. You can continue from there—I'm too lazy.

[Evgeny64]

Like I was rude and that's an argument.
Where did I tell you "dude"? Save your backwoods slang for your homies; I don't hang out with AUE guys.

[Evgeny64]

How much is significant? Like in the US, Norway, or somewhere else, or where there's no oil at all?
What will we compare it to? Or will we abandon oil altogether to prove that "we can do it"? Well, on principle, we're not a gas station, we'll cut back, we'll shrink, but at least "we're not like that"?
What share of oil and gas revenues does the "world's leading economy" receive in Russia? Should we be embarrassed or should we rejoice in their existence?
The message is unclear, whether it's good or bad...

[tralflot1832]

The Japanese guy knows something. Now these guys will be after ESPO too. Rosneft's pipeline isn't made of rubber. Get in line.

[Derbenev Anton]

And then they sell us gasoline made from this oil? That must be genius.

[YOU]

Not just gasoline, and not just for us, but also for the outskirts.

[Derbenev Anton]

Not just gasoline, and not just for us, but also for the outskirts.

Now this, comrades, is truly disgusting. If this is truly the case, we need to summon the Chinese ambassador and tell him about it.

[Nemchinov Vl]

Quote: Anton Derbenev

Now this, comrades, is truly disgusting. If this is truly the case, we need to summon the Chinese ambassador and tell him about it.

And what if he laughs in your face and asks, “Who else but us are you going to sell such volumes to?”

[Andobor]

Quote: Anton Derbenev

And then they sell us gasoline made from this oil? That must be genius.

Why do they need gasoline? They don’t have enough for their own cars.

[olboop]

ESPO crude oil contains significantly less sulfur than URALS, so it should be more expensive. Leaving aside exchange and logistical nuances.

[topol717]

Quote: olbop

ESPO oil contains significantly less sulfur than URALS, so it should cost more.

American light crude contains even less than Brent but is also cheaper. It used to be more expensive. This market doesn't work that way. If the equipment is set up to distill grade A, you can't add grade B, otherwise you'll get defective products. That's why the prices are so high. A refinery can't just redesign the process in five minutes. It takes time and resources. But they can roughly dilute Brent and Urals or Espoo and Urals and tailor it to their needs. That's why they compete.

[Ignatius555]

So, it turns out the state doesn't get any extra benefits from the price increase. But do private companies affiliated with the West get any? Wow... such a circus is probably only possible in our country.

[rocket757]

Do foreigners, gay Europeans still think that the whole world revolves around them?
Of course, the striped ones are ahead of everyone here... but their sixes are also actively rustling around...

[tatra]

China has saved approximately $27 billion on Russian oil purchases since 2022 compared to Middle Eastern ones, Rosneft CEO Igor Sechin said.

[Derbenev Anton]

I believe he's already said that Russia is an energy basket for China. This raises the question: whose interests does this citizen represent and why does he call his homeland that?

[tralflot1832]

Cool news coming from the Northern Sea Route, but tankers are still heading east—who can count them? And this will continue until mid-October, when the ice sets in.

[gridasov]

I wonder how long they plan to survive on hydrocarbons?

[Stas]

ESPO crude has a better composition than Urals and Brent crude and has always been more expensive. What's the news?

[Glagol1]

It's a simple story: good, easy oil, nearby, no risks, yuan readily available, 30/60-day payment deferrals, simple and beneficial for everyone. Mikhail Lomonosov once said that Russia's power would grow through Siberia. And he was right! Now we can say with certainty: Russia's power will also grow through the Far East and the Arctic.