China will lower domestic retail price caps on gasoline and diesel from Friday in its second cut since the beginning of the Iran war, which has constrained global energy supplies and boosted global oil prices.
Retail gasoline and diesel ceiling prices will fall by 525 yuan (HK$607.78) and 505 yuan per metric ton respectively, state planner the National Development and Reform Commission said on Thursday.
The drop stands to save a private car owner about 20.5 yuan when filling a 50-litre tank with 92-octane gasoline.
Since the start of the Iran war, Beijing has lifted diesel retail prices by 1,530 yuan per ton and gasoline prices by 1,590 yuan per ton, after factoring in Thursday’s price cuts.
However, to shield consumers, the state planner also limited the increases twice to about half of the rises implied by China’s pricing mechanism.
Higher oil prices sharply increased fuel costs for end users in May, weighing on domestic gasoline and diesel consumption.
China’s gasoline and diesel consumption in April fell by around 16 percent year on year, followed by a drop of 13 percent in May, versus an annual decline of 3.7 percent in 2025, OilChem data shows.
Gasoline and diesel consumption are likely to remain weak in June, according to Chinese consultancy JLC.
It expects gasoline demand to remain under pressure from high oil prices and EV displacement, despite a boost from holiday travel, it said in a report.
Diesel demand may rise slightly as the summer harvest peaks, lifting agricultural fuel use. But pressure from alternative energy and heavy rainfall in some areas linked to El Nino may keep overall diesel consumption weak in June, JLC added.
The NDRC reviews and adjusts retail prices of gasoline and diesel every 10 working days. Its rates reflect changes in global crude prices as well as average processing costs, taxes, distribution expenses and appropriate profit margins.
Reuters
