China has implemented a new reduction in the retail price ceilings for gasoline and diesel, effective June 5. This marks the second downward adjustment since tensions escalated in Iran, which have contributed to ongoing volatility in global energy markets. The National Development and Reform Commission (NDRC) announced that gasoline prices will be cut by 525 yuan per metric ton, while diesel prices will fall by 505 yuan per metric ton. For everyday drivers, this means saving approximately 20.5 yuan when refueling a 50-liter tank of 92-octane gasoline.
Following the outbreak of conflict in Iran, China initially raised fuel prices sharply—gasoline by 1,590 yuan per ton and diesel by 1,530 yuan per ton. However, to ease the burden on consumers, the government capped these increases at roughly half the level suggested by its pricing mechanism. Despite these measures, sustained high global crude oil prices pushed domestic fuel costs upward throughout May, leading to a significant drop in consumption of gasoline and diesel within the country.
Data from OilChem highlights that China’s gasoline and diesel consumption fell about 16% year-over-year in April. This downward trend continued into May with a 13% decline, notably steeper than the 3.7% reduction seen the previous year. Analysts at Chinese consultancy JLC predict that fuel demand will likely stay subdued through June. They attribute this to persistently elevated oil prices combined with the growing popularity of electric vehicles, which continue to dampen gasoline consumption despite the usual uptick from summer holiday travel.
Meanwhile, diesel usage may see a modest increase as agricultural activities intensify during the summer harvest season. Nonetheless, JLC warns that increased adoption of alternative energy sources and heavy rainfall linked to El Niño weather patterns could limit overall diesel demand in the near term. The NDRC adjusts retail fuel prices every ten working days by considering changes in global crude oil costs, processing fees, taxes, distribution expenses, and reasonable profit margins.
This latest price revision reflects China’s ongoing strategy to balance consumer protection with responsiveness to unpredictable global oil market dynamics. By lowering retail fuel prices now, authorities aim to ease financial pressures on consumers while navigating persistent challenges in international energy supply chains.
