US sanctions force Russia to sell oil to China at lower prices
12.02.2025 - 12:45
Strengthening US sanctions complicate the logistics of Russian oil, forcing sellers to offer discounts to Chinese buyers.
Chinese oil refiners are receiving offers to supply Russian ESPO oil at lower prices. This is reported by Bloomberg.
Significant discounts on Russian energy resources for China are associated with increasing logistical and administrative difficulties due to US sanctions.
According to traders, cargoes from the Russian port of Kozmino, transported by unauthorized tankers, are now selling at a premium of $ 2-3 per barrel to Brent. For comparison, just last month the premium was $ 5 or more. Some buyers also have the opportunity to buy oil delivered by ships subject to sanctions at even lower prices.
The limited choice of ports and tankers that can handle Russian deliveries has increased the cost of transporting ESPO to China. This made the cargo too expensive for independent refiners. This, in turn, forced them to reduce their refining volumes. At the same time, falling demand among key buyers caused prices to fall further.
In addition, some Chinese state-owned refiners decided in February to refrain from purchasing ESPO, assessing the risks of cooperation under sanctions pressure.
The US measures introduced last month significantly affected the fleet serving the port of Kozmino. As a result, transportation costs increased fivefold, and some tankers that previously operated on western routes were reoriented to the East.
Even before the sanctions were tightened, Chinese ports began to be wary of vessels that fell under restrictions. As a result, some tankers with Russian oil remained in the roadstead off the Chinese coast without receiving permission to unload.
To maintain ESPO exports, market participants are considering using less well-known terminals or transshipment of oil to other tankers outside Shandong province, which could reduce regulatory scrutiny. However, such operations entail additional costs that many refiners are currently not prepared to cover.
Also, USM wrote the day before that Albania will help Ukraine fight the Russian shadow fleet.
