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CHINA, the world’s second-biggest oil consumer, won’t cut fuel prices as long as oil trades below US$40 a barrel and will raise prices or limit price increases if the international prices go above US$130 a barrel, the country’s top economic planner, said in a statement yesterday.
The floor and ceiling aim to buffer the negative effects of violent fluctuations in international oil prices, according to the National Development and Reform Commission (NDRC).
Profits from fuel sales “will go into a government fund for enhancing energy conservation, fuel quality and energy security,” the NDRC said in the statement.
Brent oil, the benchmark for most of the world’s crude, has fallen about 33 percent in the past year and was trading at US$31.42 a barrel at 8:38 a.m. in London yesterday.
The latest reforms aim to improve China’s oil pricing mechanism, which was introduced in 2013.
The NDRC yesterday also announced cuts in the retail prices of gasoline and diesel from today. Gasoline prices will drop by 140 yuan (US$22) per ton, while diesel prices will go down by 135 yuan per ton.
Before the cut, the NDRC had suspended price adjustments of domestic refined oil products twice since Dec. 15, awaiting the changes, as it said automobile emissions are part of the reason for worsening air pollution in China.
Under the oil pricing mechanism introduced in 2013, prices of refined oil products are adjusted when international crude prices translate into a change of more than 50 yuan per ton for gasoline and diesel prices for a period of 10 working days.
China’s crude oil imports hit a record 7.82 million barrels a day (bpd) in December, customs data showed, as the world’s No. 2 oil consumer took advantage of low crude prices to fill strategic reserves, but also increased its exports of refined fuels to an all-time high.
The December figures may mean China challenges the United States to be the world’s top importer of crude. Chinese monthly imports surpassed U.S. imports once, in April 2015.(SD-Xinhua)
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