(Bloomberg) -- The coronavirus is taking a hefty toll on Russia’s ESPO Blend oil, a favorite among Chinese refiners, as prices tumble in the spot market due to weak demand from the world’s biggest crude importer.
The Russian variety is typically snapped up by China’s state-owned and independent processors due to its high diesel yield and short sailing time from the eastern Siberian port of Kozmino. But the demand hit from the virus has led to run cuts and requests for cargo deferments, with Chinese industry consultant Jcache estimating refinery throughput is down by around a quarter.
Four ESPO cargoes for April-loading were sold at a premium of $2 to $2.30 a barrel to benchmark Dubai prices, said traders in Asia who asked not to be identified. That’s down from $5 a barrel or more in the last reported sale of the grade on Jan. 22. Each cargo is typically around 100,000 tons.
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While its oil is taking a price hit from the virus, Russia has resisted Saudi Arabian-led efforts to cut OPEC+ production further. OPEC and its allies are close to abandoning plans for an emergency meeting this month to consider fresh cutbacks, several delegates from the group said.
Chinese refiners were among Asian processors that asked to take less Saudi Arabian crude than planned for March. However, some of the nation’s independent refiners went on a buying spree last week to take advantage of falling prices in the spot market.
ESPO Blend last traded at a close to $2-a-barrel premium to Dubai oil in December 2018. Buyers of the April-loading cargoes sold late last week comprised western and international trading houses, said the traders. Meanwhile, Russia’s Sokol crude traded at a premium of $3.40 to $3.60 a barrel to Dubai oil Monday, compared with $4 to $4.30 a week earlier.
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