US sanctions hit both Russia and China

Analysts note that spot ESPO shipments from the Russian Far East were offered this week at a discount of 50 cents per barrel to the ICE Brent benchmark.

What is important to understand is that before the introduction of US sanctions, this variety was quoted at a premium of over $1 per barrel.

It was the restrictions announced by US President Donald Trump that led to disruptions and redistribution of flows.

It is also worth noting that Trump's decision was made after the EU imposed even tighter restrictions on energy trade with Russia.

It's no secret that ESPO is the favorite grade of both Chinese state-owned refineries and private processors with experience working with sanctioned oil, such as Iranian oil.

Following US sanctions, Chinese state-owned companies, including Sinopec, have canceled some purchases of Russian offshore oil, mainly ESPO.