The cost of shipping Russian ESPO crude to China has
more than tripled after the US imposed aggressive sanctions on Moscow’s oil
industry last week, with rates expected to climb even higher, according to
traders.
Freight rates to
transport ESPO oil from Kozmino port on Russia’s east coast to China jumped to
between $5 million and $5.5 million on Monday, compared with $1.5 million prior
to the sanctions, said traders familiar with route, who asked not to be
identified because the matter is sensitive.
The US broadened its sanctions on tankers, targeted
two Russian companies that handle more than a quarter of the OPEC+ producer’s
seaborne exports, as well as insurers and traders. The blacklisted vessel fleet moved
around 22% of crude shipped by sea in 2024, according to the International
Energy Agency.
There’s been
an immediate impact from the sanctions, with vessels carrying cargoes
of ESPO and another Russian grade — Sokol — idling off the Chinese coast,
according to ship-tracking data. ESPO has been a favorite of China’s refiners
due to its short shipping distance.
The majority of tankers that travel the route
between Kozmino and China are Aframaxes, which have the capacity to carry
750,000 barrels.
Even prior to the
latest US penalties, ports in Shandong province were wary of handling
sanctioned tankers following a warning from a major terminal operator. Shandong
is home to most of China’s independent refiners.