Russia’s ESPO Crude Freight Rates Collapse as Tanker Glut Eases Sanction Pain

For the first time since January, freight rates for Russia’s ESPO Blend crude shipments to China have plummeted—a sign that the market is adapting to Western sanctions. By April, the cost of transporting April-loading cargoes from Kozmino port dropped to $2 million–$3 million, less than half the $4 million–$5 million seen in February and March. The reason? A sudden influx of non-sanctioned tankers flooding the market.

From Price Caps to Tanker Traffic Jams

The drop in freight costs mirrors a broader slump in oil prices. In early April, ESPO Blend crude dipped below the $60-per-barrel cap imposed by Western nations, aligning with Brent crude’s multi-year lows. While ESPO prices have since hovered near the cap, analysts warn that volatility looms—driven by fluctuating oil prices and shrinking shipping premiums.

“This is a market correcting itself,” says one trader. “Sanctions created artificial scarcity, but the system always finds workarounds.”

Sanctions Shock and the Slow Recovery

The current freight rates are a far cry from the chaos that followed U.S. sanctions on January 10, which targeted vessels servicing Kozmino port. Overnight, costs skyrocketed to $6 million–$7.5 million as major Russian players like Surgutneftegaz and Gazprom Neft scrambled for compliant ships. Over 180 vessels were blacklisted, choking supply chains.

Yet the crisis had an unintended consequence: it incentivized shadow fleets and opportunistic traders to mobilize. Now, with more tankers available, the market is inching toward pre-sanction norms. Before the crackdown, shipping ESPO Blend to China cost under $1.5 million—a benchmark traders believe is achievable again if no new restrictions emerge.

The Fragile Balance Ahead

For now, the relief in freight rates offers Russia a reprieve. But the situation remains precarious. Higher global oil prices could push ESPO Blend above the $60 cap, while geopolitical tensions risk triggering fresh sanctions. Meanwhile, traders are watching Kozmino’s docks closely—where every new tanker arrival chips away at the premium that sanctions once guaranteed.