Russian ESPO oil price exceeds $120 per barrel, traders say and data shows

• Chinese state-owned firms have secured the bulk of November and December ESPO volumes, leaving smaller 'teapot' refiners scrambling for alternatives and adding upward pressure to global oil prices
• Premiums for ESPO Blend over ICE Brent reached record levels of $20-$30 per barrel, with Urals oil also climbing to $110 per barrel this week
• US lawmakers approved legislation allowing President Trump to impose tariffs on Russian oil purchases, though traders warn this could further spike oil prices and potentially boost Russian revenues

Summary

Russian ESPO Blend crude oil prices have surged above $120 per barrel for the first time since April, driven by strong Chinese demand amid Middle Eastern supply disruptions. The premium over ICE Brent benchmark has reached record highs of $20-$30 per barrel, while Russian Urals crude has also climbed to $110 per barrel.

Key Drivers:

• Chinese refiners are aggressively purchasing Russian oil ahead of winter heating fuel demand season
• Middle Eastern crude disruptions, particularly Iranian supplies, have created feedstock concerns for Chinese refineries
• Chinese state-owned energy firms have secured the bulk of November and December volumes

Market Impact:

The supply squeeze has left smaller Chinese independent refiners ("teapots"), traditionally the main ESPO buyers, searching alternative global spot markets. This shift is adding upward pressure to global oil prices. Chinese buyers are purchasing cargoes 1-2 months ahead of typical schedules due to supply concerns, with December-loading programs already locked in early.

Policy Developments:

US lawmakers approved legislation Thursday allowing President Trump to impose tariffs on Russian oil purchases, aimed at limiting Russia's ability to finance ongoing conflicts. While intended to curtail Russian oil flows to India and China, traders warn this measure could paradoxically spike oil prices further, potentially increasing Russian oil revenues.

Broader Context:

Global oil prices are rising amid escalating Middle East tensions and the ongoing Iran conflict that began in late February. The situation highlights the complex interplay between geopolitical sanctions, supply disruptions, and unintended market consequences that may undermine policy objectives.