Russian ESPO blend crude loadings rise MOM in Dec to record high; 1 shipment to India

Russian ESPO blend crude loadings from Kozmino port rose to 41 ships in December from 36 in November, likely a record high for monthly loadings of the grade, data from S&P Global Commodities at Sea showed Jan. 2.

Prior to this, the last peak for monthly liftings of ESPO blend from Kozmino was in October, when 40 cargoes were shipped out, CAS data showed.

Of the 41 cargoes, each 100,000 mt in size, 40 shipments have either discharged or are set to discharge in China, while the one remaining shipment was discharged at India's Sikka port, where the country's largest refiner, Reliance, runs its 1.36 million-b/d Jamnagar refinery.

Among the December arrivals in China, about 16 ESPO cargoes, totaling 1.6 million mt, were discharged for the country's independent refineries in eastern Shandong province, data from S&P Global Energy showed.

This was six cargoes lower than the 22 discharged for those refineries in November.

The new 400,000-b/d Yulong Petrochemical received two ESPO cargoes in December, down from three in November and seven in October.

The remaining 14 cargoes were mostly taken by smaller, Dongying-based independent refineries, which are regular buyers of the grade.

In late October, differentials for December ESPO blend reached a one-year high -- at premiums of around $1/b to ICE February Brent crude futures, DES Shandong -- for cargoes delivered to China, driven by concerns over potential supply disruptions in the Middle East and growing competition from Chinese majors.

More recently, differentials for February ESPO blend cargoes have risen further, with shipments to China heard fetching premiums of just above $2/b to ICE April Brent, DES Shandong.

This marked a level not seen since November 2022, when December 2022-arrival cargoes traded at premiums in excess of $2/b to ICE Brent, DES Shandong.

Traders have cited tighter supply and rising prices of Iranian crude, along with stricter sanctions on Russian crude sales, as factors boosting ESPO blend crude prices for the February-loading cycle.

The higher prices come despite a month-over-month reduction in crude throughput at Chinese refineries in December due to weak refining margins, although fewer scheduled maintenance took place.

In December, 50 of China's state-run refineries and four mega private plants targeted processing 10.42 million b/d of crude, down from 10.54 million b/d in November but up from 10.19 million b/d in December 2023, Energy data showed.

Far East Russia's ESPO blend crude is likely to remain the top feedstock choice for China's independent refiners in 2025, with the incoming Trump administration in the US unlikely to significantly impact the flow of the grade between the two countries.

Traders and analysts consulted by Energy in December said ESPO blend flows to China are expected to continue or even increase in 2025, as existing term pipeline supply arrangements between Russia and China, alongside favorable prices of seaborne ESPO blend relative to other similar-quality crudes from the Middle East, keep Chinese independent refiners focused on the grade as their primary feedstock choice.