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China's demand for Russian ESPO crude oil keeps it firm despite increasing western sanctions pressure

The price of Russian ESPO blend crude oil for October loading cargoes remained stable as traders reported on Monday that the strong demand from China and abundant supply offset the growing pressure from Western sanctions.

They said that cargoes loaded from the Far Eastern Port of Kozmino were sold for a premium of about $2 per barrel over ICE Brent, on a delivery-basis to Chinese ports. This was a little different from September's levels.

Intense Ukrainian drone attacks have struck several major Russian oil refining facilities in the last few weeks. This has led to a decrease in feedstock processing and an increase in crude exports.

The price stability is despite the new wave of Western sanctions targeting Russian oil exports.

Last week, Britain, the European Union and other countries lowered the price of Russian crude oil from $60 per barrel to $47.60. Buyers were required to submit certifications within 30 days after loading in order to continue to have access to Western shipping and insurance services.

The EU has announced its 18th package of sanctions, which includes a blacklist of dozens of entities. These include Indian refiner Nayara Energy as well as several Chinese companies accused of helping Russia to bypass restrictions. The measures tighten control on energy and technology exports, and ban fuels derived from Russian crude beginning in January 2026.

Donald Trump, the U.S. president, announced on Sunday that he is ready to implement a second round of restrictions. The EU Council's Antonio Costa also said that new sanctions are being closely coordinated with United States.

Traders have noted that Chinese oil demand remains strong, despite the threat of Western sanctions. Chinese buyers will also receive Urals and Arctic crudes via the Northern Sea Route in addition to ESPO.

The latest step in the strengthening of financial ties between Beijing, Russia and the United States was taken on Friday when the Chinese rating agency CSCI Pengyuan gave its highest AAA-rating to the Russian oil and natural gas giant Gazprom, which is blacklisted by the U.S.

A trader stated that ESPO premiums may soften if U.S. Tariffs drive Indian purchases lower and more oil flows into China. A trader said that because Urals and ESPO are different in quality, increased Urals flow may not have an impact on ESPO prices.

Urals is a sour oil, while ESPO can be described as a light and low-sulphur type of oil. (Reporting and Editing by Joe Bavier).

(source: Reuters)