Russian oil price plunges as China cuts purchases

The price of Russia’s key crude grade has dropped sharply after Western sanctions prompted Chinese refineries to cut some of their purchases.

Traders said that spot offers for Eastern Siberia–Pacific Ocean (ESPO) crude supplied via the pipeline were made this week at a discount of 50 cents per barrel to the ICE Brent benchmark, Caliber.Az reports, citing Profinance.

A week earlier, before the latest sanctions round, ESPO traded more than $1 above Brent.

The oil market now expects disruptions and supply shifts after the US blacklisted Russia’s Rosneft and Lukoil, intensifying pressure on Moscow to end the war in Ukraine.

The move followed the EU’s tougher energy-trade restrictions on Russia and briefly pushed global crude futures higher.

Chinese state refiners, including Sinopec, have cancelled some shipments of Russian seaborne crude, mainly ESPO, since the sanctions were imposed. ESPO oil remains popular among both state-owned and private Chinese refiners — the latter, known as “teapots,” have experience handling sanctioned crude such as Iranian oil.

Data from Vortexa Ltd. shows that these independent refiners typically process around 800,000 barrels a day of Russia’s Far Eastern crude, including ESPO, Sokol, and Sakhalin grades. Demand is expected to stay strong, though it remains uncertain whether they can absorb volumes rejected by state refiners.

The sanctions on Rosneft and Lukoil mark the first major restrictions on Russia’s oil sector since President Donald Trump’s return to the White House.

US officials say the administration aims to make trade with Moscow costlier and riskier — without triggering a surge in global prices.

By Jeyhun Aghazada