The Truth Behind The Sharp Drop In International Oil Prices As Refined Oil Prices Are Cut

     According to calculations, this round of domestic gasoline and diesel prices down, urban fuel consumption of 7L to 8L per 100 kilometres of models, the average cost per 100 kilometres reduced by about 3.2 yuan; full load of 50 tons of large logistics vehicles, the average fuel cost per 100 kilometres reduced by about 18 yuan.

　　The seventh round of price adjustment window for domestic refined oil products was opened. The National Development and Reform Commission said that according to the recent changes in oil prices in the international market and in accordance with the current price formation mechanism for refined oil products, domestic gasoline and diesel prices will be reduced by RMB545 and RMB530 per tonne respectively from 24:00 on 15 April 2022.

　　In accordance with the relevant provisions of the "Measures for Petroleum Price Administration", the maximum retail prices of domestic petrol and diesel are adjusted every 10 working days in accordance with the changes in crude oil prices in the international market. The price adjustment is the first domestic oil price cut in 2022, 92# gasoline by 0.43 yuan per litre, 0# diesel by 0.45 yuan per litre, to the tank capacity of 50L ordinary private car calculation, after this price adjustment, car owners will spend about 21.5 yuan less to fill a tank of oil.

　　According to calculations, for urban 100 km fuel consumption of 7L to 8L models, the average cost per 100 km is reduced by about 3.2 yuan; for large logistics vehicles with a full load of 50 tons, the average fuel cost per 100 km is reduced by about 18 yuan.

　　The price monitoring centre of the National Development and Reform Commission showed that international oil prices fell before rising during the current oil price adjustment cycle (March 31 to April 14), with the overall level dropping significantly compared to the previous price adjustment cycle. The average oil price of London Brent and New York WTI fell by 8.19% compared to the last price adjustment cycle.

　　During the current price adjustment cycle, the sharp decline in international oil prices was mainly influenced by two factors.

　　First, large-scale crude oil reserves were released and supply tensions were expected to ease. The United States announced that it would put 180 million barrels of crude oil reserves on the market over the next six months, releasing about 1 million barrels per day, the largest ever; other member countries of the International Energy Agency also plan to put 60 million barrels of oil reserves on the market, and there will be a combined 240 million barrels of oil reserves on the market.

　　Secondly, economic growth and demand for oil is expected to decline under the impact of the Russia-Ukraine conflict and the epidemic. The World Trade Organization lowered global economic growth expectations to 2.8% in 2022; the International Energy Agency continued to lower global oil demand expectations to 99.4 million barrels per day. The decline in demand led to a pick-up in crude oil inventories, with the latest phase of US commercial crude oil inventories rising above 420 million barrels.

　　The National Development and Reform Commission's Price Monitoring Centre expects oil prices to remain sharply volatile in the short term. The future needs to focus on the statement and progress of European energy sanctions against Russia. Affected by the Russia-Ukraine conflict, current Russian crude oil production has fallen from a level of 11 million barrels per day in March to 10.3 million barrels per day, and the International Energy Agency expects Russian daily production to fall by 1 million barrels in April and by a significant 3 million barrels or so in May. Whether this shortfall will be made up is the main uncertainty affecting oil prices.

　　Based on the current level of international crude oil prices, the next round of oil price adjustments will start with an upward trend. At the moment, the market is still worried about the supply risk due to the renewed obstruction of the Russia-Ukraine negotiations and the uncertainty of the geopolitical situation, and the probability of an upward adjustment of the next round of refined oil prices is expected to be higher.