China on Tuesday announced an increase in the prices of petrol and diesel for the second time in almost two weeks. The reason for this is the increase in international oil prices due to the ongoing war in West Asia. China's top economic planning body, the National Development and Reform Commission (NDRC), announced that this new round of price increases will come into effect from Wednesday. China had increased the prices of petrol and diesel on March 23 itself. This step was taken as part of preparations to deal with the fuel crisis amid fears over the ongoing US-Israel-Iran war.
NDRC said in a statement that since the change in domestic oil prices in late March, international crude oil prices have seen significant fluctuations. The NDRC said that due to the control measures, petrol and diesel prices will increase by 420 yuan ($61) and 400 yuan ($58) per ton, respectively. The NDRC said China's three largest oil companies – China National Petroleum Corporation, China Petrochemical Corporation and China National Offshore Oil Corporation – as well as other refineries have been instructed to continue production and facilitate transportation, so that the oil supply remains stable. The NDRC also urged relevant authorities to intensify market monitoring and inspection efforts.
Government news agency Xinhua, citing the NDRC's statement, said that in order to maintain order in the market, authorities should take strict measures to crack down on activities that violate the National Pricing Policy. According to reports, China has emergency oil reserves of about four months. This country is dependent on imports for about 70 percent of its crude oil needs. About 45 percent of this import is related to the flow through the Strait of Hormuz. This means that about 30 percent of China's total oil supply could be affected by any obstruction in Hormuz.
Analysts say that given the mix of China's energy consumption and power production, it seems that the reduction in energy supply due to the blockage in Hormuz will not have the same impact on China as it could on most other large economies and Asian countries. China also has gas pipelines connected to Russia across its borders, and has long-term energy supply contracts with Moscow.
