(Bloomberg) -- The price of Russian crude and fuel is rising for buyers in Asia as a pool of bigger customers from China and India expands, putting pressure on smaller refiners that have eagerly consumed the cheap oil.
Offer levels for Russia’s Urals and ESPO crude, as well as fuel oil, surged over the past weeks, according to traders with knowledge of the matter. Increased interest from Chinese state-owned and large private refiners such as Sinopec, PetroChina Co. and Hengli Petrochemical Co., in addition to a jump in Indian demand, led cargoes to be snapped up at higher prices, they said.
The larger refiners have muscled in to a patch typically dominated by China’s smaller independent processors, known as teapots, which have been consistent consumers of discounted Russian crude. ESPO oil from the nation’s Far East has been a particular favorite due to its short shipping distance.
Offers for ESPO that’s typically loaded at Kozmino port was close to $6.50 to $7 a barrel below ICE Brent on a delivered basis to China, while flagship Urals shipped from western ports was around $10 under the same benchmark, said traders. That’s an increase of as much as $2 from last month, marking one of the steepest jumps since sanctions were imposed on Dec. 5, they added.
China and India have become key outlets for Russian crude after most others shunned its energy due to the war in Ukraine. The pool of buyers willing to import cheap oil from the OPEC+ producer has grown as more players set aside concerns over Western sanctions that had kept them on the sidelines.
By: Bloomberg News with assistance from Elizabeth Low.
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