US sanctions on Russia’s oil industry have caused the cost of shipping ESPO crude oil to China to more than triple, with further price hikes expected, as tankers face disruptions.
The transportation costs for Russian ESPO oil shipments to China have surged dramatically following the US sanctions imposed on Moscow’s oil sector. The price of shipping crude from the Kozmino port on Russia’s eastern coast to China has increased from $1.5 million to between $5 million and $5.5 million, according to traders familiar with the route. This price hike is a direct result of the expanded sanctions, which target Russian shipping companies, insurers, and traders involved in the oil trade.
The United States’ latest round of sanctions, introduced last week, aims to cripple Russia’s maritime oil export operations by blacklisting vessels and companies responsible for a significant portion of global crude shipments. The sanctions have had an immediate impact on the shipping industry, leading to a backlog of vessels off China’s coast. According to ship tracking data, tankers carrying Russian ESPO and Sokol crude grades are now idled near the coast, unable to dock and unload due to the sanctions.
These sanctions target two major Russian companies that handle over a quarter of the maritime exports of OPEC+ countries, severely disrupting the oil supply chain. The International Energy Agency reports that these blacklisted vessels accounted for around 22% of crude oil shipped by sea in 2024. This has left many Chinese refineries struggling to secure timely shipments of ESPO, which had been a popular choice due to its shorter delivery time compared to other grades of oil.
Before the sanctions, the cost of shipping Russian ESPO oil was relatively stable, but the measures have forced traders to bid significantly higher prices to secure space on available tankers. The Aframax tankers, the primary vessels used for the Kozmino-to-China route, are particularly affected. These ships, which can carry up to 750,000 barrels of oil, are now in short supply, further driving up transportation costs.
Additionally, the impact of the sanctions has been compounded by the reluctance of ports in China’s Shandong province to accept sanctioned vessels. Shandong, home to most of China’s independent refineries, has seen cautious port operators warn against accepting these vessels, further complicating the flow of Russian oil.
