China Clears Out August ESPO Cargoes Weeks Early as Hormuz Risk Drives Russian Crude Rush
Chinese refiners have swept up all August loadings from Russia's Kozmino terminal ahead of schedule, with Vortexa saying Middle East disruption has pulled buying into September.
Every August-loading cargo of Russia's ESPO crude blend from the Kozmino terminal on the Pacific coast has been sold, Rigzone reported on Thursday (2026-07-24), with Chinese buyers clearing the programme weeks earlier than typical seasonal patterns.5
China has taken in roughly 1.4 million barrels a day of Russian crude so far in July, according to data cited by Rigzone. ICE Brent crude front-month was trading at $97.81 a barrel by mid-session on Thursday (2026-07-24), while Urals — Russia's western export grade — sat at $80.73, a discount of about $17. That spread keeps the economics of Russian barrels attractive for Chinese state refiners, even as competing Asian buyers have steadily pressured the Urals discount that opened up after Western sanctions rerouted Russian supply eastward.5
"Chinese oil majors led by Unipec have been snapping up Russian ESPO since July, with the latest disruption in the Middle East accelerating August and September buying," said Emma Li, lead China market analyst at Vortexa. September cargoes are also moving ahead of schedule, Vortexa's analysis indicates.5
The driver is the Strait of Hormuz. Renewed U.S.-Iran strikes on July 10 (2026-07-10) tightened traffic through the passage and revived supply disruption fears, lifting ICE Brent crude front-month above $76, OilPrice.com reported. By Tuesday (2026-07-21), Reuters data cited by CryptoBriefing put ICE Brent front-month between $89 and $91. By Thursday morning (2026-07-24) it had reached $97.81.2,3
Roughly 20 percent of global seaborne oil transits Hormuz. Chinese state refiners appear to have concluded that Middle East supply is less reliable than the ESPO route, which bypasses both Hormuz and the Red Sea. Kozmino loads directly for Asian buyers via tanker on Russia's Pacific coast — the supply chain is geographically separate from the disruption zone.5
The same anxiety is producing different responses elsewhere in Asia. Pakistan's refiners have been inquiring about crude from the U.S., Nigeria, Singapore, and Central Asia, Rigzone reported on Wednesday (2026-07-22), reflecting a scramble for alternatives that China, with its established Russian supply relationships, does not face in the same way.4
OPEC+ voted to raise collective output targets by 188,000 barrels per day from July, following monthly increases of 206,000 bpd approved in April and May, OutlookBusiness reported on Monday (2026-06-08). But analysts noted the additional supply is unlikely to fully offset market tightness because several members cannot reach their revised targets due to logistical disruptions. The OPEC basket price stood at $102.76 on Thursday (2026-07-24), well above ICE Brent front-month, pointing to supply-weighted tightness across medium and heavy grades.1
Hopes of a broader Washington-Tehran agreement — and the eventual reopening of Hormuz to full capacity — have weakened since hostilities renewed, analysts said. That removes what had been a widely held expectation of relief before winter demand season builds, and it makes Chinese pre-positioning in Russian crude look less like opportunism and more like contingency planning.1
The pace of September ESPO nominations from Kozmino will be the market's next read on how far Chinese buyers are pushing the cover-buying programme. If Unipec and its peers continue booking well ahead of schedule through August, it suggests procurement has shifted from near-term insurance to a longer repositioning away from Middle East crude — a move that would further compress the Urals discount and intensify competition for the Atlantic basin grades vying to fill the gap.5,1