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China and India have suspended purchases of Russian oil after the introduction of new US sanctions, which caused a sharp rise in the cost of tanker transportation. Reuters reports this with reference to traders and shipping companies.
According to traders and shipping companies, trade in Russian oil that was loaded in March has come to a standstill in Asia as a large price gap between buyers and sellers has emerged in China. This happened after the cost of tanker freight, which was not affected by US sanctions, rose sharply.
In particular, bids for March Russian ESPO Blend crude exported from the Pacific port of Kozmino jumped by $3-5 per barrel to the ICE Brent price on a ship-to-China basis. Prices rose after freight rates for an Aframax tanker on this route jumped by several million dollars.
Before the sanctions were imposed, strong winter demand and rising prices for competing Iranian crudes had led to spot premiums
Spot premiums are the difference between the price of oil on the spot market and its benchmark (futures) price for a certain period. The spot market is a market where goods are bought and sold for immediate delivery.
prices for ESPO Blend crude to China have risen to almost $2 per barrel, the highest since the start of Russia’s full-scale war against Ukraine, which provoked discounts of up to $6.
As a reminder, the United States imposed a large-scale package of sanctions against Russian oil companies on January 10. The restrictions affected 184 tankers, including the Russian shadow fleet. As a result, at least three tankers carrying more than 2 million barrels of Russian oil are stuck off the coast of China.
The sanctions and supply disruptions could significantly reduce the volume of Russian oil imports to China and India, which were the main consumers of Russian oil last year, accounting for 36% and 20% respectively.
