China will raise the retail prices of gasoline and diesel starting this Saturday to reflect the recent changes seen in international crude oil prices, the country's top economic planner said on Friday. In a statement, the National Development and Reform Commission confirmed that gasoline and diesel prices will rise by 320 yuan (around 47 U.S. dollars) and 310 yuan per tonne, respectively, in a move which has been driven by rising global prices.
The changes mean that filling a 50-liter tank with the most regular grade of gasoline will cost Chinese motorists around 12.5 yuan more at the pump.
It comes following weeks of uncertainty surrounding the Middle East conflict and the disruption along the Strait of Hormuz -- a key shipping passageway through which one-fifth of the world's oil supply typically passes.
However, signs emerged at the start of this month that tensions between Iran and the United States had begun to ease, and market expectations for a breakthrough in the stand-off strengthened, leading to a reduction in geopolitical risk premiums.
Meanwhile, the United Arab Emirates withdrew from the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+ mechanisms, with OPEC subsequently announcing it would increase production by 188,000 barrels per day in June. These multiple factors are each contributing to a pullback from the recent high levels.
Despite this, the current crude oil supply is facing severe shortages which is having a considerable knock-on effect across numerous industries such as the aviation sector, where several major airlines have announced significant cuts, with some 75,000 summer flights reportedly being canceled.
Analysts say the recovery period will be relatively long, which means international oil prices may remain volatile in the near term.
"The core factor currently influencing international oil prices is the progress of U.S.-Iran negotiations. According to market estimates, the average daily crude oil production of the Gulf countries in April was about 11.9 million barrels, only about 43 percent of the pre-conflict level. Even if the Strait of Hormuz reopens, it will only be able to restore 70 percent of the production scale after three months," said Zhang Jinyi, an analyst from private market analysis and statistics firm Sublime China Information (SCI99).
China to raise domestic gasoline, diesel prices in response to int'l situation
