China's domestic fuel prices are set for their third consecutive reduction this evening. The National Development and Reform Commission announced that, following the previous adjustment on June 18, international crude oil prices have experienced a rapid decline followed by minor fluctuations. The average price over the 10 working days preceding this adjustment was lower than the average over the 10 working days before the last price change.
In response to shifts in the international oil market, the prices for standard gasoline and diesel will be lowered by 950 yuan and 915 yuan per tonne, respectively, effective from midnight on July 3.
This adjustment marks the 13th fuel price revision of the year and the fourth decrease, resulting in a pattern of eight increases, four decreases, and one suspension for the year so far. Liu Bingjuan, Chief Energy Analyst at Longzhong Information, noted that this follows two previous cuts on June 4 and June 18, representing the largest single reduction in nearly six years. Following this triple reduction, the price levels for gasoline and diesel have significantly fallen, with diesel prices returning to the "6-yuan era."
Calculations show that this adjustment translates to reductions of approximately 0.76 yuan per liter for 92-octane gasoline and 0.78 yuan per liter for 0-grade diesel. This means a private car owner could save around 40 yuan for a full tank, while a truck driver could save approximately 400 yuan for a full tank.
How are China's fuel prices adjusted? The domestic fuel pricing mechanism stipulates that the maximum retail prices for gasoline and diesel are adjusted every 10 working days based on the average change in a basket of international crude oil prices. The adjustment magnitude is not determined by the price at a specific point or over a few days, but by comparing the average price of the basket over the 10 working days preceding the current adjustment to the average over the 10 working days before the previous adjustment.
Liu Bingjuan explained that since the last adjustment on June 18, as tensions between the US, Israel, and Iran have eased and shipping traffic through the Strait of Hormuz has gradually resumed, international crude oil prices have fallen rapidly and then moved within a narrow range. Consequently, the average price over the 10 days preceding this adjustment was significantly lower than the average before the last adjustment.
Monitoring by the Price Monitoring Center of the National Development and Reform Commission shows that during this latest pricing cycle (from midnight June 18 to midnight July 3), international oil prices trended downwards in a volatile manner. Factors included the overall easing of US-Israel-Iran tensions and the resumption of production and navigation in the Gulf region. The price of Brent crude futures fell to around $72 per barrel, returning to levels seen before the outbreak of the aforementioned tensions, pulling the cycle's average price below that of the previous period.
The Price Monitoring Center anticipates uncertainty in the future trajectory of international oil prices, which will primarily depend on several factors. These include the actual efficiency and safety of the resumed shipping traffic through the Strait of Hormuz, the speed at which Gulf oil-producing nations restore production capacity and increase exports, and the pace of global crude inventory replenishment alongside adjustments to various countries' strategic reserves.
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