Maintaining domestic fuel costs; the government continues to implement refined oil price regulation

Securities Times reporter Han Zhongnan

Against the backdrop of ongoing conflict between the U.S. and Iran via Israel, and repeated fluctuations in the geopolitical situation in the Middle East, on April 7, China continued to implement price control measures on refined oil prices. According to the refined oil price mechanism, starting from 24:00 on April 7, the domestic gasoline and diesel (standard grade) prices should be increased by 800 yuan per ton and 770 yuan per ton, respectively. After the adjustment, the effective increases were actually 420 yuan and 400 yuan. This is the second time since March 23 that the state has carried out a price adjustment for refined oil.

During this round of price adjustment, relevant departments emphasized that China National Petroleum Corporation (CNPC), China Petrochemical Corporation (Sinopec), CNOOC, and other crude oil processing enterprises should organize the production and transportation of refined oil, ensure stable market supply, and strictly implement national price policies. Relevant departments in various regions should increase market supervision and inspection efforts, severely investigate and punish actions that do not comply with national price policies, and maintain normal market order.

Since the beginning of this year, the international crude oil market has gone through a period of intense “roller-coaster” trading. Since late February, the U.S. and Israel launched military strikes against Iran. Iran subsequently blocked the Strait of Hormuz and attacked U.S. military bases, triggering violent shocks across the global energy and chemical markets. The Strait of Hormuz accounts for about one-fifth of the world’s oil supply; disruption to shipping directly leads to serious concerns in the market about oil supply in the coming months.

As of March 31, the Intercontinental Exchange (ICE) Brent crude oil futures price recorded an unprecedented monthly increase of more than 60%. In April, although international oil prices have pulled back somewhat, Brent crude and WTI crude have still remained at high levels above $100 per barrel.

Market analysts believe that the future direction of international oil prices will depend on three key variables: whether transportation corridors are “blocked,” whether oil reserves are released, and the duration of the U.S.-Israeli-Iran war.

The sharp rise in international oil prices directly increases China’s costs for importing oil and for using fuel. On March 23, based on the prevailing mechanism, domestic gasoline and diesel prices should have been increased by 2,205 yuan per ton and 2,120 yuan per ton, respectively. However, to mitigate the impact caused by abnormal surges in international oil prices and to ease the burden on downstream users, the state adopted temporary adjustment measures, resulting in effective increases of 1,160 yuan and 1,115 yuan, respectively.

Industry experts said that with international oil prices continuing to fluctuate significantly and sharply, the state implemented two consecutive rounds of adjustments, fully demonstrating a clear policy orientation of stabilizing domestic fuel costs and ensuring the economy runs steadily.

(Editor: Wen Jing)

Keywords:

                                                            Oil price