China reaffirms subsidy to refiners if oil hits above US$130

CHINA said on Wednesday it will subsidise refiners if global oil prices hit above US$130 a barrel, reiterating an existing fuel policy that closely tracks international markets but also with a goal to shield consumers from price shocks.

The subsidies will be measured based upon the actual sales volume of gasoline and diesel and the handouts will initially last for two months before further announcements if oil prices are consistently above US$130, the ministry said.

“(The subsidy) is to safeguard stable fuel supplies, ease costs for manufacturers and alleviate burdens for consumers,” the ministry said on its website.

Under China’s pricing system since 2016, retail fuel prices are assessed every 10 working days to track global crude oil when benchmark prices move between US$40 and US$130.

However, prices move more modestly once global oil breaches US$80, and retail prices change only marginally or freeze if global markets expand outside the US$40-US$130 band.

Benchmark Brent crude futures stood at around US$118 a barrel on Wednesday, having been rangebound between US$100 and US$120 for the last three months or so, as investors weighed up tight supply amid the Ukraine crisis and a slowing global economy. REUTERS