China hikes fuel prices to highest levels in more than a decade

Beijing

CHINA'S retail petrol prices have been hiked to levels not seen since at least 2006 while diesel prices were increased to a decade-high after global oil benchmarks surged in the wake of Russia's invasion of Ukraine.

As of Friday (Mar 18), retail petrol prices will rise by 750 yuan (S$160) a tonne and diesel prices by 720 yuan a tonne, the National Development and Reform Commission said. They are the biggest hikes since the current pricing mechanism was introduced in 2013.

Beijing, for example, will see its petrol prices jump to 10,770 yuan a tonne and its diesel prices climb to 9,695 yuan a tonne. Local authorities set different prices though they will all implement the hike.

Under China's pricing system, retail fuel prices are assessed every 10 working days to reflect global crude oil benchmarks so long as the benchmark prices move between US$40 and US$130. Outside that band, retail prices do not change or only move marginally.

Brent prices hit a peak of US$139.13 a barrel on March 7 but have since eased, trading at US$102 on Thursday. That compares with levels of around US$99 before the Feb 24 invasion.

The surge in prices has prompted China's independent refiners, known as teapots, to cut production.

Operational rates in Shandong province, China's oil refining hub, fell to a two-year low of 57.09 per cent last week, according to China-based energy consultancy JLC.

China's daily oil throughput in the first two months of 2022 fell to its lowest since December 2020. State-backed Sinopec said its refineries were running at "fairly high" operational rates to ensure steady fuel supply.

Fuel demand is, however, being hit by a resurgence in Covid cases. In cities such as Shanghai and Shenzhen, residents have been ordered to stay at home and factories have been shut. Road traffic there slid 38 per cent and 27 per cent from a year ago on Wednesday, Baidu data suggested. REUTERS

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