China’s retail gasoline prices have been hiked to levels not seen since at least 2006 while diesel prices were increased to to a decade-high after global oil benchmarks surged in the wake of Russia’s invasion of Ukraine.

As of Friday, retail gasoline prices will go up by 750 yuan ($118) a tonne and diesel prices by 720 yuan a tonne, the National Development and Reform Commission said. They are the biggest hikes since the current pricing mechanism was introduced in 2013.

Beijing, for example, will see its gasoline prices jump to 10,770 yuan a tonne and its diesel prices climb to 9,695 yuan a tonne. Local authorities set different prices though they will all implement the hike.
Under China’s pricing system, retail fuel prices are assessed every 10 working days to reflect global crude oil benchmarks so long as the benchmark prices move between $40 and $130. Outside that band, retail prices do not change or only move marginally.

Brent prices LCOc1 hit a peak of $139.13 a barrel on March 7 but have since eased, trading at $102 a barrel on Thursday. That compares with pre-invasion levels of around $99.

The surge in prices has prompted China’s independent refiners, known as teapots, to cut production.

Operational rates at teapots in Shandong province, China’s oil refining hub, fell to a two-year low of 57.09% last week, according to China-based energy consultancy JLC.

Fuel demand is, however, being hit by a resurgence in COVID cases with lockdowns increasingly imposed. In cities such as Shanghai and Shenzhen, residents have been ordered to stay at home and factories have been shut. Road traffic in the two mega cities on Wednesday slid 38% and 27% from a year ago, Baidu data suggested.

Warehouses at all ports in Shenzhen are shut until March 20, while delivery and pick up services in some southern Chinese cities have also been suspended.
Source: Reuters (Reporting by Muyu Xu and Dominique Patton; Editing by Edwina Gibbs)