August 28 news
The latest round of adjustments to China's refined oil prices took effect at 24:00 on August 28. The retail price of refined oil is about to increase, marking the eleventh rise, five falls, and one suspension in 2026. During this cycle, crude oil prices have risen, and the crude oil change rate has remained positive, leading to the "eleventh" increase in the retail price of refined oil.
Entering this pricing cycle, international oil prices initially rose and then fell. As of the 28th, the settlement price for the September WTI crude oil futures contract stood at $83.53 per barrel, while the settlement price for the October Brent crude oil futures contract reached $89.70 per barrel. At the beginning of this pricing cycle, oil prices surged significantly—directly due to the official expiration of the 60-day memorandum of understanding between the U.S. and Iran, with neither side showing any intention to renew it. Negotiations collapsed completely over disagreements regarding control of the Strait of Hormuz, dashing earlier market expectations of an easing of tensions. In the later stage of the pricing cycle, as geopolitical factors eased somewhat, crude oil prices saw a slight pullback. Overall, however, crude oil prices continued to trend upward. As of the 28th, on the 10th working day, the rate of change in crude oil prices reached 6.70%, corresponding to an increase of 375 yuan and 360 CNY per ton for gasoline and diesel in China, respectively. Converted into per-liter prices, this translates to an increase of 0.29 yuan per liter for 92-octane gasoline, 0.31 yuan per liter for 95-octane gasoline, and 0.31 yuan per liter for No. 0 diesel.
Gasoline: Recently, Chinese refinery operations have remained relatively stable, with normal supplies of refined oil products. The operating rate of Shandong independent refineries has continued to decline to below 50%, and while the operating rates of independent refineries have decreased, the operating rates of major refineries have remained largely unchanged. Additionally, the inventories of refined oil products at both major and independent refineries in China are generally maintained at low levels, keeping supply-side pressures manageable and providing a basis for price increases. At the same time, resource shortages at major units have not been effectively alleviated, and some regions have even experienced tight resource conditions. During the summer vacation, increased private car travel and the use of car air conditioning have provided some support for gasoline consumption; however, the rising penetration of new energy vehicles has imposed structural pressure, significantly impacting the traditional gasoline market. High oil prices themselves also suppress the frequency of vehicle use by some car owners, but increased travel during the holiday season ensures some demand for gasoline, leading to an upward trend in gasoline market prices.
Diesel: Recently, the supply side of the diesel market in China has been normal. With the gradual retreat of high temperatures and frequent rainfall, and as some sea areas have become more accessible, the operating rates of construction, infrastructure, and outdoor mining operations have slightly increased. The demand for fuel in the fishing industry has also risen, leading to an increase in the essential consumption of diesel. As a result, the diesel market in China has seen an upward trend.
Looking ahead, given the significant divergence in demands between the U.S. and Iran, reaching a comprehensive agreement remains highly challenging. The geopolitical situation in the Middle East is experiencing a phase of temporary easing rather than an end to the crisis. We expect the market to enter a period of high volatility and fluctuation, making it difficult for any single-direction trend to emerge. In the short term, oil prices are likely to continue rising sharply. The strong support at higher crude oil price levels is putting upward pressure on China’s gasoline and diesel prices. Moreover, demand for refined petroleum products has increased somewhat compared to earlier periods. As a result, gasoline and diesel prices are expected to keep climbing in the coming period. However, given that we’re already operating in a high-price range, the extent of further price increases may be constrained.
