Oil Prices Are Set for Another Monthly Dip
Crude oil prices extended their latest decline today, looking set for a monthly drop that, according to Reuters, will be the deepest in three years. At the time of writing, Brent crude was trading at $63.46 per barrel, with West Texas Intermediate at $59.68 per barrel. Since the start of the month, the benchmarks have lost between 15% and 16%, Reuters reported. This is the deepest dive since November 2021. Trump’s tariff offensive seems to be the chief reason for the price decline, with virtually every analyst and economist predicting global economic trouble because of the tariffs. The predictions naturally affect oil prices negatively, but the effect has been reinforced by OPEC+’s decision to roll back its production cuts by a larger amount than initially planned, deepening fears of oversupply. In more recent news that pressured the benchmarks, Chinese factory activity shrank in April as a direct result of Trump’s tariff barrage, with the purchasing managers’ index reading for the month dipping from 50.5 in March to 49, Reuters reported earlier today. “The sharp drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that China’s economy is coming under pressure as external demand cools,” Capital Economics analyst Zichun Huang told Reuters. “Although the government is stepping up fiscal support, this is unlikely to fully offset the drag, and we expect the economy to expand just 3.5% this year,” she added. Since any bad economic news out of China tends to pressure oil prices immediately, this latest report will likely weigh on Brent crude and WTI as well, potentially deepening the weekly rout and extending it over time. A weekly build in U.S. crude oil inventories reported by the American Petroleum Institute on Tuesday did not help prices, either, even though it follows a bigger draw for the previous reporting week.
Russia’s ESPO Blend crude finds new market in India amid China dip
Chinese firms, India’s ESPO Blend crude oil imports from Russia reached their peak since August 2024 in April, Reuters quoted data from LSEG and traders in a report. ESPO Blend is Russia’s primary light sweet crude oil grade, a significant component of its energy exports. This particular blend is loaded onto tankers at the Kozmino port, strategically located to facilitate efficient shipment to key Asian markets. ESPO Blend Notably, ESPO Blend has become a highly sought-after crude oil, particularly among Chinese independent refiners, often referred to as “teapots,” due to its specific characteristics and the reliable supply from the East Siberia–Pacific Ocean (ESPO) pipeline system that feeds the Kozmino terminal. Due to sanctions on Russian entities and scheduled maintenance, Chinese state refiners reduced their ESPO Blend crude oil acquisitions in March and April. This increased the supply available to India, the second-largest consumer of Russian oil. The quality of ESPO crude, characterised by its low sulfur content and moderate API gravity, makes it an attractive feedstock for refineries looking to produce a range of high-value petroleum products. Its popularity in Asia underscores the evolving global energy landscape and the increasing importance of Russian oil supplies to meet the growing energy demands of the region. The consistent flow of ESPO Blend from Kozmino through dedicated infrastructure ensures a stable supply, further solidifying its position as a favored crude oil grade for many Asian buyers. Imports to India this month Indian ports have been receiving increased shipments of Russia’s ESPO Blend crude oil, reaching approximately 400,000 metric tons (around 100,000 barrels daily) this month. This is a significant increase from March, which saw only one cargo of 100,000 tons, as reported by LSEG and traders. India’s ESPO Blend crude oil imports reached their highest level in April since August of the previous year, according to Reuters data. “Recently, traders have started showing us ESPO volumes as well. Seems there is low demand in China for ESPO”, one of the sources in India’s oil industry was quoted in the report. India is the top seaborne buyer of Russian oil, but it typically purchases limited quantities of ESPO Blend. This is because the grade’s complex logistics and higher cost compared to Russia’s Urals crude usually make it a less appealing option for Indian refiners. India to import additional 200,000 metric tons of ESPO Blend LSEG reports that India is expected to import an additional 200,000 metric tons of ESPO Blend in May. Market participants suggest that India’s ESPO Blend imports could increase next month due to greater availability and continued weak Chinese demand for the crude. Lower international benchmark prices have caused the cost of Russian oil, including ESPO Blend, to fall below the $60 per barrel Western price cap. This decrease may facilitate the easier procurement of the grade.