There is no cheap Russian oil for China anymore

Prices for Far Eastern oil are breaking records and can reach more than $ 140 per barrel for Chinese refineries.

"Russian suppliers have increased prices for ESPO Blend for China to record levels. This is facilitated by high demand and rising freight costs caused by a military conflict involving Iran,"Reuters writes with reference to traders.

According to them, batches of ESPO Blend oil for delivery in late December and January are offered at a premium of more than $ 25 per barrel to the price of the reference grade of ICE Brent and there have been offers even higher than $ 30 per barrel, taking into account delivery.

One of the traders told the agency that shipments delivered in November and December were offered at a premium of $26-$27 and some have not yet been sold.

On the one hand, with such high price offers, sellers are trying to test the willingness of buyers to pay in the face of interruptions in exports from the Middle East. On the other hand, US President Donald Trump announced the granting of exemptions from key sanctions against Russia, although the details of this decision remain unclear, Reuters noted.

The current price of Brent is $ 115 per barrel and the cost of Russian Far Eastern oil exceeds $ 140. At the same time, as traders told the agency, Chinese refineries are still willing to pay a premium of $ 20 per barrel, and they are not satisfied with the current record price levels.

"Nevertheless, recently one of the independent refineries concluded a deal to purchase oil shipments for delivery in November and December at a premium of $ 23-26 per barrel to ICE Brent," a major Chinese trader told Reuters.

One of the main reasons for the jump is the cost of freight. Thus, Aframax-class vessels have risen in price on the route from Russia to China to $ 10 million per flight, but then dropped to $ 2 million.