The Eastern Siberia-Pacific Ocean crude blend is trading above the benchmark Brent grade, the outlet says
© Getty Images / Bloomberg Creative
A global shortage of diesel is benefiting one of Russia’s key export crude blends, ESPO, as it is being traded at a premium to global benchmark Brent, Bloomberg reported on Monday, citing unnamed market players.
The Eastern Siberia-Pacific Ocean (ESPO) crude blend, named after the pipeline that carries it to export markets, climbed to a premium of about $0.50 a barrel to Brent on a delivered basis for October shipments to China, traders told the outlet.
Brent crude was trading above $94 per barrel on Monday.
ESPO, which is especially suitable for diesel fuel production, saw its biggest price increase since the G7 and the European Union introduced a price cap on Russian oil and petroleum products in an effort to cut Moscow’s energy revenues, according to Viktor Katona, lead crude analyst at energy analytics firm Kpler.
“[The] last time when ESPO was positive to Brent was back in November 2022,” said Katona. According to the analyst, along with private refineries, Chinese state processing plants have also boosted their purchases, taking up to seven more cargoes of October-loading ESPO than usual.
READ MORE: Global oil market faces acute shortage – IEA
The global energy market is faced with a shortage of diesel as refineries fail to make enough of the key industrial fuel. The situation was exacerbated after OPEC+ heavyweights Saudi Arabia and Russia slashed production and exports of denser, more-sulfurous crude used to produce diesel fuel vital for industry and transport, Bloomberg reported.
Diesel inventories around the world are substantially lower than the usual volumes for this time of the year, despite an industrial slowdown in key markets in the EU and the US, Reuters analyst John Kemp wrote earlier this month.
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