Russian ESPO Crude Premiums Fall on Weak China Demand

Spot premiums for Russia's Far East ESPO Blend crude oil scheduled for delivery to China in June have softened, driven primarily by weak refining margins that have dampened interest from independent refiners. Market sources report that June-delivery cargoes are currently trading at premiums of approximately $5 to $6 per barrel above ICE Brent on a delivered basis. This represents a notable decline from the $8 per barrel premiums observed for May supply.

The dip in pricing comes despite a broader period of heightened demand for Russian crude that began in early March. Geopolitical tensions involving Iran previously disrupted Middle East exports, which had pushed Russian oil premiums toward record highs. Additionally, market sentiment was influenced by a decision from the United States to temporarily waive certain sanctions on Russian oil at sea, though traders noted this waiver only applies to shipments loaded before April 17 and does not cover the June ESPO cargoes.