Authored by Irina Slav via OilPrice.com,

Chinese refiners are paying a hefty premium for Russia's ESPO crude to replace Iranian crude that independent refiners were importing before the U.S. installed its naval blockade on the country.

East Siberia-Pacific Ocean crude, or ESPO, for delivery in November is trading at a premium of over $7 per barrel, with offers reaching as high as $10 per barrel over Brent crude, Bloomberg reported today, citing traders. The blend is loaded from Russia's Far East coast and can reach the buyers in China in less than a week, the publication noted.

China is the biggest buyer of ESPO crude, with a market share of 83% for the first seven months of the year. However, this share is down from 88% a year earlier. The change came amid stronger ESPO buying from Indian refiners, whose market share for the Far Eastern Russian crude blend went up from 12% to 16% for the first seven months of the year, according to data from Kpler and Vortexa. Total oil exports from Russia's Far Eastern port of Kozmino ticked up by 6% over the first seven months of the year.

India raised its ESPO imports due to the slump in overall Chinese oil imports between May and June, and the supply disruptions in the Middle East, which delayed many term cargoes Indian refiners were expecting in the early summer.

Normally, Indian refiners prefer the Urals blend but have now warmed up to ESPO even though it takes longer to reach its destinations in India and is costlier than Urals. However, the Far Eastern blend is a good backup option for Indian buyers in times of disruption, according to energy analysts.

Meanwhile, India's crude oil imports from Russia are estimated to have eased in August from July's record high, as Ukrainian attacks on Russian export infrastructure and competition from China for Russia's barrels have dented Indian intake of Moscow's oil.