International oil prices saw a significant increase on the 9th. At market close, the price of light crude oil for May delivery on the New York Mercantile Exchange rose by $3.46 to settle at $97.87 per barrel, a gain of 3.66%. The price of London Brent crude for June delivery increased by $1.17, closing at $95.92 per barrel, up 1.23%.
A domestic refined oil product price adjustment is scheduled for 24:00 on April 21st. The current statistical cycle for this price adjustment, spanning 10 working days, has now completed 30% of its duration. Influenced by the recent sharp decline in international oil prices, the current rate of crude oil price change has reached -3.19%, forecasting a price reduction of 270 yuan per ton. Based on this expected decrease, prices for gasoline and diesel are projected to fall by 0.21 to 0.24 yuan per liter.
How are domestic refined oil product prices adjusted in China? Price fluctuations are a major public concern. The current pricing mechanism is primarily based on the "Petroleum Price Management Measures" issued by the National Development and Reform Commission in 2016. As a major petroleum importer with over 70% of crude oil sourced internationally, China's prices for gasoline and diesel are adjusted every 10 working days based on changes in international crude oil prices.
The mechanism has three key features. First, domestic prices are linked to a *basket* of international crude oil average prices, meaning adjustments are influenced by multiple benchmarks, not just one. Second, the adjustment amount is determined by comparing the *average price* of this basket over the 10 working days preceding the adjustment with the average from the previous cycle, not by short-term price spikes or dips. Third, *interval controls* are implemented; under certain conditions, the state will intervene with price control measures.
In recent years, domestic refined oil prices have been adjusted according to this mechanism, resulting in both increases and decreases. Recent significant fluctuations in international crude oil prices, particularly record highs for Middle Eastern crude, have directly increased China's import and fuel costs, leading to an overall upward trend in domestic prices recently.
Under what circumstances does the state implement control measures? According to the existing mechanism, price controls are triggered when the average price of the international crude oil basket exceeds $130 per barrel or falls below $40 per barrel during the 10-working-day review period. Even when the price hasn't breached the $130 "ceiling," temporary controls can be applied based on special circumstances, such as significant domestic price level increases, major emergencies, or abnormal international market volatility, allowing for pauses, delays, or reductions in the adjustment幅度.
These temporary controls, while maintaining the core pricing framework, aim to balance consumer and producer interests, mitigate the impact of abnormal international price surges, alleviate the burden on end-users, and ensure stable economic operation and social livelihood. For example, in a recent adjustment, the theoretical increase for gasoline and diesel was substantially higher than the actual implemented increase after controls were applied, resulting in lower price hikes per liter for consumers.
If international crude oil prices rise significantly in the future, surpassing the $130 per barrel ceiling, further control measures will be activated. In such a scenario, the maximum retail prices for gasoline and diesel would either not increase or increase only marginally for the portion above the ceiling. To ensure stable supply, the state might also implement fiscal and tax support policies for refiners. A precedent was set in 2022 during the Russia-Ukraine conflict when prices were temporarily capped after exceeding $130, accompanied by temporary subsidies for refining enterprises.
Authorities have stated they will guide major oil producers and sellers to ensure stable production, distribution, and supply, while strictly adhering to national pricing policies. Market supervision will be intensified to crack down on violations of price regulations and maintain normal market order. Consumers can report any related price irregularities through the 12315 platform.
Comments