Domestic gasoline and diesel prices may see the largest increase, with price hikes entering the "9 yuan era"

Refilling a 50-liter tank with 92-octane gasoline is expected to cost an additional 86.5 yuan.

Text | “Finance” Reporter Xu Peiyu

Editor | Huang Kaixi

The prices of gasoline and diesel in China, which are linked to international crude oil prices, will see the largest single adjustment since the market-based pricing of refined oil began.

The deadline for the next adjustment of China’s retail maximum prices for refined oil is 24:00 on March 23. “Finance” has learned from multiple market information agencies that, according to the pricing adjustment rules set by the National Development and Reform Commission, the price of refined oil is expected to increase by more than 2,000 yuan per ton, with the maximum retail price of 92-octane gasoline rising above 9 yuan per liter.

According to calculations by Zhuochuang Information, as of the close on March 19, the international crude oil prices used as a reference for China’s refined oil pricing have increased by 45.21%, corresponding to an approximate increase of 2,000 yuan per ton in retail prices. With one working day remaining before the adjustment window opens, it is expected that the change rate of crude oil will continue to rise, and the final increase in China’s retail refined oil prices could reach about 2,200 yuan per ton. Converted to per-liter prices, this means an increase of 1.73 yuan for 92-octane gasoline, 1.83 yuan for 95-octane gasoline, and 1.87 yuan for No. 0 diesel per liter. Based on this, filling a 50-liter tank with 92-octane gasoline will cost an extra 86.5 yuan.

Compared to retail prices, wholesale prices of refined oil in China are more market-oriented, allowing companies to adjust prices independently. According to monitoring by multiple market agencies, recent wholesale prices of China’s refined oil have risen significantly, with the retail-wholesale price gap narrowing markedly, and in some cases even inverted. Under these circumstances, some traders have hoarded and withheld supplies. After this adjustment, the retail-wholesale price gap is expected to widen again.

Potential Largest Adjustment

Since 2026, China’s maximum retail prices for refined oil have undergone five adjustments: four increases and one pause. According to Longzhong Information, after the last adjustment (at 24:00 on March 9), the prices of gasoline and diesel in China have increased by a total of 1,160 yuan and 1,120 yuan per ton respectively since the end of last year.

Longzhong believes that there is no doubt that the retail prices of refined oil will be increased at 24:00 on March 23. However, recent turmoil in the Middle East has caused sharp fluctuations in international oil prices, and in extreme cases, regulatory authorities may limit the increase. The final adjustment amount will depend on regulatory deliberation.

On June 20, 2008, both gasoline and diesel prices increased by 1,000 yuan per ton; the second major increase occurred after the Russia-Ukraine conflict erupted, on March 17, 2022, with gasoline and diesel prices rising by 750 yuan and 720 yuan per ton respectively. Under normal adjustment rules, the adjustment at 24:00 on March 23 will be the largest single adjustment since the market-based reform of refined oil prices began.

China’s refined oil market underwent market-oriented reform in 2008, with further improvements to the pricing mechanism in 2013 and 2016. According to the “Oil Price Management Measures” issued by the National Development and Reform Commission in 2016, the maximum retail prices of gasoline and diesel are based on international crude oil prices, considering domestic average processing costs, taxes, reasonable circulation expenses, and appropriate profits. Prices are adjusted every 10 working days based on changes in international crude oil prices. If the adjustment is less than 50 yuan per ton, no change is made, and the difference is carried over or offset in the next adjustment.

The “Measures” specify that when international crude oil prices fall below or equal to $40 per barrel, refined oil prices are calculated based on a crude oil price of $40 per barrel with normal processing profit margins. When prices are above $40 but below or equal to $80 per barrel, prices are calculated with normal profit margins. When prices exceed $80 per barrel, processing profit margins are gradually deducted until refined oil prices are calculated at zero profit. When prices exceed $130 per barrel, to balance the interests of producers and consumers and maintain stable economic operation, appropriate fiscal and tax policies are adopted to ensure production and supply, and prices for gasoline and diesel are generally kept unchanged or increased minimally.

The specific international crude oil varieties and weights used as benchmarks for China’s refined oil pricing have not been publicly disclosed by regulators. When the National Development and Reform Commission issued the “Notice on Further Improving the Formation Mechanism of Refined Oil Prices” in March 2013, it adjusted the crude oil varieties linked to domestic refined oil prices. The notice stated that, based on the structure of imported crude oil and changes in international crude oil trade, the varieties used as benchmarks for domestic refined oil prices were adjusted accordingly.

Industry analysts believe that after the 2013 adjustment, China’s refined oil pricing benchmark incorporated or increased the weight of Middle Eastern Dubai crude oil, while reducing or removing the weight of New York WTI crude oil. Since the U.S. military actions against Iran, Dubai crude oil prices in the Middle East have risen more sharply than WTI and London Brent futures prices. This is one of the reasons for the larger increase in China’s refined oil prices this time. In the last adjustment (at 24:00 on March 9), domestic retail prices of gasoline and diesel increased by 695 yuan and 670 yuan per ton respectively.

Due to conflicts causing the Strait of Hormuz to halt transportation and sharply reducing trade volume, Middle Eastern crude benchmarks have surged to historic highs, becoming the most expensive crude globally. As of March 19, Dubai crude spot prices reached $166.97 per barrel, with a premium of nearly $50 per barrel over Brent crude.

Downstream profits in the refined oil industry are affected

After the adjustment at 24:00 on March 23, the impact on fuel vehicle travel costs will be significant. According to Zhuochuang Information, for example, a private car driving 2,000 km per month with an average fuel consumption of 8 liters per 100 km will see its fuel costs increase by about 138 yuan before the next adjustment window (24:00 on April 7, 2026). For the logistics industry, a heavy truck driving 10,000 km per month with a fuel consumption of 38 liters per 100 km will see an increase of approximately 3,553 yuan in monthly fuel costs.

The wholesale price of refined oil is rising faster than retail prices, squeezing the profit margins of retail terminals like gas stations. Meanwhile, rising crude oil costs are also reducing refinery profits.

According to Longzhong, during this cycle (from 24:00 on March 9 to 24:00 on March 23), the theoretical retail profit for gasoline in China was 567 yuan per ton, down 62.3% from the previous cycle; for diesel, it was 373 yuan per ton, down 71%. Wholesale prices of gasoline and diesel are close to the maximum wholesale limit, significantly narrowing retail margins. Meanwhile, refinery profits initially showed some recovery but later declined again due to weak demand, with refined oil price increases lagging behind crude oil, further compressing profits.

International commodities information agency Argus reports that private refineries in the Bohai region of China have recently reduced their offers due to sharply rising crude oil costs severely eroding refining margins, hoping to sell products at higher prices later. Some refining companies have also raised diesel prices for all their sales subsidiaries to the wholesale ceiling, limiting sales to individual buyers to under 30 tons and only to downstream users, halting sales to private traders.

Many Asian countries importing Middle Eastern crude oil are experiencing similar issues. According to the Petroleum Association of Japan (PAJ), as of the week ending March 14, the average operating rate of Japanese refineries was 69.1%, down 8.5 percentage points from the previous week—the largest weekly decline since May 2024.

Meanwhile, jet fuel prices in multiple countries have recently risen, with several Asian airlines announcing fare hikes or fuel surcharge increases. On March 11, Thai Airways announced plans to raise ticket prices by 10%-15% to cover rising fuel costs. Indian airlines are raising long-haul flight fares by 15% and considering further increases. Chinese airlines such as Juneyao Airlines, Xiamen Airlines, and China Southern have recently announced increases in fuel surcharges on some international routes.

Jet fuel prices significantly impact airline profitability. Air China’s 2024 annual report states that, all other variables remaining unchanged, a 5% increase or decrease in average jet fuel prices would raise or lower the company’s fuel costs by approximately 2.686 billion yuan.