China cuts petrol, diesel price caps for first time since start of Iran war

[BEIJING] China will lower its domestic retail price caps for petrol and diesel from Tuesday (Apr 21) night, marking its first cut in 2026 as global oil prices retreated from their peaks during the Iran war.

The price drop will save a private-car owner about US$3.23 when filling a 50-litre tank of 92-octane petrol.

Beijing has raised maximum retail prices for petrol and diesel three times since March, as the war – which began with US and Israeli strikes against Iran on Feb 28 – sent oil prices soaring.

The recent two rises were capped at around half the increase implied by China’s pricing mechanism, in an effort to shield consumers.

China’s National Development and Reform Commission (NDRC) said that the retail ceiling prices of petrol and diesel will fall by 555 yuan (S$103.57) and 530 yuan a tonne, respectively.

It reviews and adjusts retail prices of petrol and diesel every 10 working days.

The NDRC’s rate reflects changes in global crude prices and accounts for average processing costs, taxes, distribution expenses and appropriate profit margins.

Chinese consultancy Oilchem said that high prices of petrol and diesel have sharply curbed retail consumption, leading to a surge in inventories at independent refineries and prompting widespread wholesale price cuts to clear stocks.

China last raised the maximum petrol and diesel prices on Apr 7 – by 420 yuan a tonne and 400 yuan a tonne, respectively.

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Oil prices have fallen from peaks reached in March after the US and Iran agreed on a temporary ceasefire, though the outlook has turned more uncertain again.

Iran condemned the US for what it called an attack on the Iranian commercial vessel Touska, raising fresh doubts over whether the agreement will hold.

The US has maintained its blockade of Iranian ports, while Iran lifted and then reimposed its own blockade of the Strait of Hormuz.

The strait typically handles roughly one-fifth of the world’s oil and liquefied natural gas supply.

Citi analysts said another month of disruption in the strategic waterway could push oil prices towards US$110 a barrel in the second quarter of 2026. REUTERS