APPEC: ESPO premiums cross over $20/b as Chinese buyers compete for Russian barrels

Premiums for Russia's ESPO crude for November delivery into China's Shandong province rose to over $20/b during APPEC 2026, as Chinese buyers competed for limited Russian barrels amid tightening supply and growing concerns over fourth-quarter feedstock availability, traders, buyers, and local refinery sourcestold Platts over Sept. 9-10.

Offers for November-delivery ESPO cargoes rose from around $4-$5/b against ICE Brent futures at the start of September to $15-$16/b on a DES Shandong basis by Sept. 9, and exceeding$20/b late in the APPEC week, the market participants added.

"Last night, we got offers of close to $20/b for November-delivery Russian ESPO crudes, and it is over $20/b today," a Shandong-based refinery source attending APPEC said on Sept. 10.

While offers remained above immediately tradable levels, the refinery source said the premium surge reflected an increasingly tight market.

"The signal is clear that supply is extremely tight compared with demand," the refinery source added.

Platts, part of S&P Global Energy, assessed ESPO CFR North Asia at $105.01/b Sept. 10, up from $99.79/b Sept. 9. The previous high was $110.03/b on April 30.

Major buyers tighten availability

Participants saidaggressive buying by a handful of major market players has accelerated the rise in ESPO premiums.

"The key is major players are in the market to take up the bulk of those ESPO cargoes, along with a few Sokol and Sakhalin Blend cargoes, leaving limited volume for small-sized independent refineries," a regular buyer of Russian crude in Shandong said.

Several traders attending APPEC reported stronger participation from China's independent refining sector than in recent years, with refiners actively seeking Russian barrels through private discussions with trading houses.

"More refineries have been here to find crude this year as far as I know," a Shandong-based trader said.

The renewed interest in Russian grades comes as independent refiners face tighter access to Iranian barrels, historically a key source of discounted feedstock, prompting a broader search for alternative supplies, market participants said.

Market participants also pointed to a recent purchase of a VLCC-sized November-delivery Plutonio cargo by a Shandong-based independent refinery at around $20/b against January ICE Brent futures on a DES Shandong basis, a deal that helped establish a higher tradable value for sweet crude grades into China.

Oct feedstock risks emerge

The scramble for cargoes has also highlighted concerns over October crude availability.

Several independent refiners remain under-covered for October processing requirements due to the limited availability of spot Iranian crude cargoes, according to market participants.

"Some refineries would have to cut throughput if they cannot find enough feedstock," a Shandong-based refinery source said.

"No one would like to shut down because it is not allowed, so they have to keep operating. The problem is deciding whether to reduce runs in September or October," the source added.

The tightening feedstock outlook has pushed refiners to secure barrels further forward, supporting the sharp rise in November ESPO premiums, market participants said.

China's independent refiners imported about 3.2 million mt of ESPO crude in August, while total Russian crude imports reached 4.42 million mt, up 38.8% from July, according to data from Platts. Russian crude imports over January-August by those refineries totaled 37.82 million mt, up 63.6% year over year.