Competition from India has reduced discounts for April-loading ESPO shipments to northern China to around $6.80 per barrel against June ICE Brent DES basis, down from $8.50 per barrel last month for March-loading oil, according to three trading sources.
Private Indian refiners are competing with independents in China for Russian ESPO crude loading in April, driving prices higher after Moscow cut deliveries of its hallmark grade Urals, industry sources said.
China, which is scheduled to acquire record levels of Russian crude in March, generally sweeps up all of the ESPO crude supplied from the Pacific port of Kozmino due to near proximity while sanctions on Russian oil have narrowed the pool of buyers.
However, due to low prices, Indian refiners Reliance Industries Ltd and Nayara Energy have purchased at least five of the approximately 33 ESPO crude cargoes for April, according to four people familiar with the matter.
Reliance and Nayara did not reply promptly to demands for comment.
That is up from one cargo for March delivery, it’s the first since buying three for November 2022, ship-tracking data compiled by Kpler and Refinitiv showed.
One of the sources said prices for April loading ESPO crude to India were about $5 a barrel below Dubai quotes on a delivered ex-ship (DES) basis.
Indian refiners often acquire Russian oil delivered, with the supplier managing insurance, freight, and shipping.
While most cargoes are priced below the G7 and EU price caps, prices of Russian low-sulfur oil imported by India have gone beyond the $60 per barrel cap due to increased demand. According to Reuters estimates, China has also been purchasing ESPO at prices higher than the price ceiling.
To dodge sanctions, Indian enterprises are paying for some specialty Russian crudes with non-dollar currencies and bypassing Western services and institutions.
Competition from India has reduced discounts for April-loading ESPO shipments to northern China to around $6.80 per barrel versus June ICE Brent DES base, down from $8.50 per barrel last month for March-loading oil, according to three trade sources.
On a free-on-board basis, the same quality Murban crude from Abu Dhabi was traded at a premium of roughly $3.30 per barrel to Dubai prices.
According to Reuters calculations, April-loading Murban crude is around $9 per barrel more expensive than ESPO shipped to China and India.
According to Kpler’s data, seaborne ESPO crude shipments averaged 800,000 barrels per day in 2022, accounting for 17.3% of Russia’s total seaborne exports.
Although Moscow reduced shipments from its western ports by 10% in March compared to the previous month, exports of flagship Russian-grade Urals totaled 1.74 million bpd.