Fuel prices rise in line with global trend

An employee fills up a car at a gas station in Nanjing, Jiangsu province. SU YANG/FOR CHINA DAILY

Gasoline, diesel costlier on market volatility expectations; supplies stable

China raised retail prices of gasoline and diesel on Wednesday, the 10th such increase since the end of last year.

On Tuesday, the National Development and Reform Commission, the country's top economic regulator, said the gasoline price will increase by 390 yuan ($58.07) per metric ton and the diesel price will increase by 375 yuan per ton. This means the retail price will be more than 9 yuan per liter for 92# gasoline and even more than 10 yuan for 95# gasoline.

Under the current pricing mechanism, when international crude oil prices change by more than 50 yuan per ton and remain at that level for 10 working days, the prices of refined oil products like gasoline and diesel in China are adjusted accordingly.

Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute, said the volatile international geopolitical situation has further intensified expectations of market volatility and higher oil prices.

International oil prices have remained high during the past few weeks. Brent crude futures reached $121.17 a barrel on Tuesday while US West Texas Intermediate crude settled at $118.93 a barrel.

According to Suhail Al Mazrouei, the energy minister of the United Arab Emirates, a key oil producer and exporter, oil prices are "nowhere near" their peak as Russian oil and gas are not completely off the market and "China is not back yet" (in the market as a big-ticket buyer).

But, if energy supplies from Russia are disrupted massively and China starts importing substantially higher quantities of fuel, then prices may rise toward, or even surpass, their all-time peaks.

Earlier this month, Citi and Barclays, two major global banks, raised their oil price forecasts citing the effects of Russian crude oil sanctions and delays in the renewal of the Iran nuclear deal－without which there will be no meaningful increase in crude oil exported from Iran.

Luo of Sinopec said he believed the increase in gasoline and diesel retail prices in China will ensure demand-supply balance as the adjustments are timely.

According to the National Bureau of Statistics, energy supply is stable in China by and large despite energy prices worldwide constantly rising due to changes in the international situation.

China has been stepping up efforts to ensure sufficient energy supply. While some of the energy products are costlier, the rise in their prices is much lower compared with the situation outside China, said Fu Linghui, an NBS spokesman.

China has long been relying on oil imports. During the past three years, more than 70 percent of the energy consumed in China has been imported. In 2021, however, for the first time in the past two decades, China's dependence on crude oil imports dropped to 72 percent from 73.6 percent in 2020, the China Petroleum and Chemical Industry Federation said.

Total crude imports declined last year to 513 million tons, down 5.3 percent year-on-year－the first such fall in the last 20 years, thanks to increasing efforts of domestic energy companies in local oil field exploration and exploitation in the past few years, it said.

China's three biggest oil companies－China National Petroleum Corp, China Petroleum& Chemical Corp, and China National Offshore Oil Corp－have been asked to maintain oil production at current levels and facilitate transportation to ensure stable supplies.