This Round of Refined Oil Retail Prices Achieves "Six Consecutive Increases" in China

April 7th, according to news,

The latest round of adjustments to China's refined oil prices took effect at 24:00 on April 7. The retail price of refined oil in China will be raised again, marking the sixth increase and no decreases with one suspension in 2026. During this cycle, crude oil prices have fluctuated significantly, but the change rate has remained positive, leading to a "six consecutive increases" in the retail price of refined oil.

Entering this pricing cycle, international oil prices have been on an upward trend. As of the 6th, the settlement price for the May contract of U.S. WTI crude oil futures stood at $112.41 per barrel, while Brent crude oil futures rose to a settlement price of $109.77 per barrel for the June contract. During this pricing cycle, crude oil prices have been fluctuating at high levels, driven primarily by the renewed escalation of geopolitical tensions in the Middle East. Market concerns about prolonged disruptions to oil supplies have intensified, compounded by factors such as differences in contract deliveries, bullish expectations from investment banks, and developments in OPEC’s policy stance. The U.S.-Iran conflict shows no signs of easing; the Strait of Hormuz remains blocked, with only a limited number of vessels able to pass through. Oil-producing countries, including Saudi Arabia, have already been forced to cut production, further heightening supply risks and sustaining upward pressure on oil prices. Meanwhile, weak global demand persists, raising fears that escalating geopolitical conflicts could weigh on the economy and oil consumption. Moreover, the Federal Reserve is unlikely to cut interest rates in the short term. Overall, crude oil prices have continued their upward trajectory during this cycle. As of the 7th, on the 10th working day, in order to mitigate the impact of rising international oil prices on China, the Chinese government continues to implement regulatory measures on refined oil prices. According to the refined oil pricing mechanism, starting from 24:00 on April 7, the prices of gasoline and diesel (standard grades) in China should have been raised by 800 yuan and 770 CNY per ton, respectively. After adjustments, the actual increases are 420 yuan and 400 CNY per ton, respectively. Converted into per-liter prices, No. 92 gasoline has risen by 0.32 yuan per liter, slightly less than the previously expected increase of 0.31 yuan; No. 0 diesel has risen by 0.34 yuan per liter, also slightly less than the previously expected increase of 0.32 yuan.

Gasoline: Affected by the obstruction of crude oil transportation and the cancellation of long-term contracts, some refineries are considering reducing production, while also suspending orders and tightening plans. The spot price of Shandong local refineries remains high, and with China's refined oil inventory at a low level, the supply has tightened further, leading to even tighter spot liquidity, which supports the strengthening of prices. Recently, with the warming weather and blooming flowers, travel has increased; however, the growing popularity of new energy vehicles has led to demand not meeting expectations. Influenced by the rise in crude oil prices, the gasoline market is experiencing high-level fluctuations.

Regarding diesel: Recently, the supply side of the diesel market has seen a slight reduction, while demand has been boosted by the start of spring plowing and the resumption of logistics. Construction sites and projects across various regions are gradually reopening, leading to a gradual recovery in diesel market demand. Downstream buyers are showing increased willingness to take delivery, resulting in a tight supply-demand balance in the short term and keeping diesel prices at high levels.

Looking ahead, the situation in the Middle East remains highly uncertain. The navigational conditions in the Strait of Hormuz and the future trajectory of U.S.-Iran and Israeli-Palestinian conflicts will continue to dominate short-term oil price trends. Notably, the short-term fee risks associated with the joint management agreement for the strait, drafted by Iran and Oman, remain favorable for oil prices, suggesting that oil prices will stay elevated in the near term. From China’s perspective, the short-term refinery operating rates have declined, leading to a reduction in refined oil supply. As a result, gasoline and diesel prices are expected to remain at high levels in the coming period.