August 14 news
The current round of China's refined oil price adjustment window will open at 24:00 on August 14. The retail price of refined oil is about to be reduced. In 2026, the retail price of refined oil in China will experience ten increases, five decreases, and one suspension. During this cycle, crude oil prices have declined, and the crude oil change rate has remained negative. The retail price of refined oil is about to be "the fifth" decrease.
As we enter this pricing cycle, international oil prices have shown a downward trend. As of the 13th, the settlement price for the September WTI crude oil futures contract stood at $81.25 per barrel, while the settlement price for the October Brent crude oil futures contract was $87.07 per barrel. At the outset of this pricing period, oil prices experienced a sharp decline, primarily due to conciliatory signals released by U.S. President Trump: The U.S. has temporarily postponed launching a new round of strikes against Iran and is hopeful of reaching a swift agreement. Market expectations are that shipping restrictions in the Strait of Hormuz may soon be lifted, reducing the risk of disruptions to crude oil supplies. Moreover, the U.S. has accused oil companies of excessive profits and called on the industry to lower gasoline prices, which has also dampened market optimism about rising oil prices to some extent. Although short-term sentiment has cooled, underlying risks remain in the two major energy chokepoints in the Middle East, making it difficult to completely eliminate geopolitical premiums. In the latter part of this pricing cycle, the geopolitical situation in the Middle East has once again tightened. The Strait of Hormuz remains closed to normal shipping traffic, driving international crude oil prices higher and narrowing the room for further reductions in retail fuel price caps. As of the 14th, the change rate for crude oil varieties on the 10th working day was -4.35%, corresponding to a reduction of RMB 230 and RMB 220 per ton for gasoline and diesel in China, respectively. Converted into per-liter prices, this translates to a reduction of RMB 0.18 per liter for No. 92 gasoline, RMB 0.19 per liter for No. 95 gasoline, and RMB 0.19 per liter for No. 0 diesel.
Gasoline: Recently, Chinese refinery operations have not changed much, and the supply of refined oil products is normal. The operating rate of Shandong independent refineries remains around 50%, and the supply of refined oil products in China is normal. The inventory changes of gasoline and diesel in China are not significant, with inventories at Shandong independent refineries and major refineries still at relatively high levels for the year. The market is mainly taking a wait-and-see approach, and overall purchasing and sales performance is average. Gasoline market prices have risen due to the boost from crude oil. During the summer vacation, there has been an increase in resident travel, but the continuous rise in the penetration rate of new energy vehicles has created structural pressure, significantly impacting the traditional gasoline market. High oil prices themselves also suppress the frequency of vehicle use by some car owners, leading to a lack of effective support for gasoline demand. As a result, the extent of the price increase for gasoline is limited.
Diesel: Recently, the diesel market supply in China has been normal. It is currently in the traditional low consumption season. The high temperatures and frequent rains during the summer have led to a slight decrease in the operation rates of construction, infrastructure, and outdoor mining, resulting in weak demand for diesel. The summer harvest has ended, leading to a contraction in agricultural fuel demand. The hot and rainy weather in South China has further suppressed downstream fuel demand, weakening the demand for diesel. Strong cost support has kept diesel prices at a high level, but the poor demand has limited the price increase.
Looking ahead, given the significant divergence in demands between the U.S. and Iran, reaching a comprehensive agreement remains highly challenging. Geopolitical tensions in the Middle East are likely to ease only temporarily rather than marking the end of the crisis. We expect market conditions to enter a phase of high volatility and fluctuation, making it difficult for any single-directional trend to emerge. While high crude oil prices provide strong support for Chinese gasoline and diesel prices, the impact of persistently high oil prices, alternative energy sources, and rainy weather continues to weigh on consumption, potentially keeping gasoline and diesel demand sluggish. Although high crude oil prices continue to underpin refined product prices, weakening demand will likely restrain further price increases in the later period. As a result, gasoline and diesel prices are expected to remain volatile in the coming months.
