A new adjustment window for China's retail price ceiling on refined oil products is set to open at 24:00 on July 3rd. Multiple industry analysts forecast that fuel prices are poised for their first "three consecutive declines" of the year, which could also represent the largest single reduction so far in 2024.
Data from a monitoring model by Zhuochuang Information indicates that, based on the closing of the international market on July 1st and corresponding to the 9th working day of the domestic pricing cycle, the reference crude oil change rate was -19.31%. It is projected that at 24:00 on the 3rd, gasoline and diesel prices will be cut by 855 yuan per ton. This translates to a reduction of approximately 0.67 yuan per liter for 92-octane gasoline, 0.71 yuan for 95-octane gasoline, and 0.73 yuan for 0-grade diesel. Based on this adjustment estimate, filling a 50-liter tank with 92-octane gasoline would cost about 33.5 yuan less.
Meng Peng, a refined oil analyst at Zhuochuang Information, stated that during the current retail price adjustment cycle (from 24:00 June 18th to 24:00 July 3rd), international crude oil prices have generally trended weaker, with the average price significantly lower than the previous cycle. This is attributed to factors such as the US and Iran reaching a memorandum of understanding and increased traffic through the Strait of Hormuz. The crude oil change rate started negative at the beginning of this cycle and has continued to deepen, solidifying expectations for a retail price cut.
Market data shows that on June 22nd, at least 36 commercial vessels transited the Strait of Hormuz, the highest single-day traffic volume since the outbreak of US-Iran hostilities in late February. On the supply and demand front, an Iraqi oil official indicated that Iraq has further increased crude output from its southern oilfields to about 2.1 million barrels per day, with production at the Zubair field rising by approximately 120,000 barrels per day to about 320,000 barrels per day. The Iraqi oil ministry had previously stated that output from southern oilfields is expected to exceed 3 million barrels per day within one to two months. Zhao Yinghan, a refined oil analyst at JLC, noted that the ongoing easing of US-Iran tensions has continued to put downward pressure on international oil prices.
According to the latest calculations by JLC, domestic gasoline and diesel prices should be reduced by 825 yuan per ton at 24:00 on the 3rd. Zhao Yinghan believes that with the progress in US-Iran negotiations and the reopening of the Strait of Hormuz, Middle Eastern crude oil previously held up in the Gulf is entering a phase of concentrated release. This is creating a localized, short-term supply surplus, pressuring the oil market. International oil prices may still have room to fall next week, and the new pricing cycle could start with another negative change rate, suggesting the possibility of further domestic retail price reductions.
Liu Bingjuan, a refined oil analyst at Longzhong Information, said that based on current calculations, the price cut at 24:00 on the 3rd is expected to be around 810 yuan per ton, equivalent to roughly 0.6 yuan per liter, potentially marking the largest single adjustment decline this year. "A price reduction in this round is a certainty, but the final adjustment magnitude will be subject to official announcement."
So far this year, domestic fuel prices have undergone twelve adjustments, resulting in "eight increases, three decreases, and one hold." The largest reduction implemented this year occurred on April 21st, when gasoline and diesel prices were cut by 555 yuan and 530 yuan per ton, respectively. Based on current international oil price levels, the projected reduction exceeding 800 yuan per ton on July 3rd would set a new record for the largest drop this year.
Following military strikes by the US and Israel against Iran on February 28th, Iran subsequently blockaded the Strait of Hormuz, a critical global energy chokepoint, causing a sharp spike in worldwide oil prices. On April 30th, the global benchmark Brent crude price briefly surpassed $126 per barrel, reaching its highest level since June 2022. To ensure stable domestic economic operation, authorities intervened twice to regulate refined oil prices on March 23rd and April 7th. Influenced by easing geopolitical tensions and falling international oil prices, domestic fuel prices recorded "two consecutive declines" during the adjustment windows on June 4th and June 18th.
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