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China · Energy Policy · Fuel Prices · Inflation
China's National Development and Reform Commission (NDRC) capped domestic gasoline and diesel price increases by over Yuan 1,000/metric ton, effectively halving the scheduled hike for consumers, to mitigate inflationary pressures and ensure economic stability amidst rising international crude prices driven by the Middle East conflict.
This intervention, a rare move not seen in over a decade, means consumers will see an average reduction of approximately Yuan 0.85 per liter for both gasoline and diesel nationwide. Under China's existing pricing mechanism, which links domestic fuel prices to a basket of international crude benchmarks including ICE Brent, NYMEX WTI, and DME Oman, the scheduled increases would have been Yuan 2,205/mt for gasoline and Yuan 2,120/mt for diesel.
The government's action aims to cushion downstream users from the surge in global oil benchmarks to multiyear highs, as reported by Platts. This mechanism typically narrows retail price adjustments when crude prices exceed $80/b and freezes them above $130/b, impacting refining margins.
