According to an announcement from the National Development and Reform Commission on July 17th, domestic refined oil product prices will be increased starting from 24:00 on July 17th. This adjustment follows a period of rising international crude oil prices since the last price adjustment on July 3rd. The average price over the 10 working days preceding this adjustment is higher than the average over the 10 working days before the previous adjustment. Consequently, the prices for domestic gasoline and diesel (standard products) will increase by 300 yuan and 290 yuan per ton, respectively.
Based on this adjustment, analysis from Zhuochuang Information indicates the equivalent price increases per liter will be approximately 0.24 yuan for 92-octane gasoline, 0.25 yuan for 95-octane gasoline, and 0.25 yuan for 0-grade diesel. Following this price hike, for a typical small private car with a 50-liter fuel tank, the cost to fill up with 92-octane gasoline will increase by about 12 yuan.
During this latest pricing cycle, driven by a sustained rebound in international crude oil prices, the crude oil change rate shifted from negative to positive and continued to widen within positive territory. Data from JLC Energy Research shows that as of the tenth working day on July 17th, the average price of the referenced crude oil basket was $77.87 per barrel, with a change rate of 6.01%.
A representative from the NDRC's Price Monitoring Center commented on the recent significant rise in international oil prices. They noted that during this cycle, Brent crude futures rose from around $72 to approximately $84 per barrel, with the cycle's average price clearly exceeding the previous period. This increase is attributed to two main factors: heightened market concerns over crude supply due to escalating geopolitical tensions in the Middle East, which temporarily expanded the geopolitical risk premium; and intensified supply-demand dynamics in the crude market, influenced by near-stagnant traffic through the Strait of Hormuz following renewed threats of blockade and a substantial drawdown in US strategic petroleum reserves.
The NDRC Price Monitoring Center also stated that geopolitical uncertainties in the short term remain significant. The ongoing impact of Middle East developments on international oil prices will require continued close monitoring.
Wang Yanting, an energy analyst at JLC, explained that since late June, overall domestic refinery operating rates have declined, leading to a tightening of resource supply. This is due to an increase in shutdowns at independent refineries, prompted by poor refining margins, coupled with major state-owned refineries maintaining relatively low operating loads. Meanwhile, terminal fuel demand has seen some improvement, supported by summer travel. Additionally, bolstered by market expectations of rising prices, downstream users have become more active in replenishing inventories, leading to relatively lively market transactions. This has helped both state-owned and independent refineries achieve better sales, reducing overall inventory levels and pushing prices gradually higher.
Wang Yanting further commented on the outlook. With international crude oil prices surging again, increasing raw material costs for refineries, some plants may become more cautious about raising output. Consequently, overall domestic refinery operating rates are expected to remain low, limiting the potential for increased refined product supply. However, as the peak summer demand season continues, overall demand is expected to remain favorable, which should further alleviate pressure from the domestic refined product supply surplus. Given these factors, the domestic refined oil market currently has several supportive elements, suggesting overall prices may continue to rise.
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