first! Temporary control over refined oil prices! An article explaining the subsequent impact in detail

# Shanghai Securities News

On March 23, China’s National Development and Reform Commission (NDRC) announced temporary controls on domestic refined oil prices, resulting in actual gasoline and diesel price increases roughly half the theoretical level — the first such adjustment since the current pricing mechanism took effect in 2013. Experts noted that the lag in domestic oil price adjustments relative to international markets helps smooth volatility. Properly reducing refining profit margins, slowing price hikes, or providing subsidies to specific industries when oil prices are excessively high can effectively buffer shocks to downstream sectors.

On the afternoon of March 23, the domestic refined oil price adjustment was finalized. The NDRC announced that under the existing pricing mechanism, gasoline and diesel prices (standard grade) would have been raised by **2,205 yuan** and **2,120 yuan per ton** respectively, effective midnight March 23. After the temporary controls, the actual increases were **1,160 yuan and 1,115 yuan per ton**.

Domestic refined oil prices have long been adjusted according to the current mechanism, and this marks the first regulatory intervention since 2013. As a result, the actual price increase was about **0.85 yuan per liter less** than the theoretical adjustment, significantly below market expectations.

“This control has essentially halved the actual price increase, which will effectively ease upward pressure on end-user fuel costs,” said Xu Peng, a refined oil analyst at Jinlian创.

Interviews with industry chain sources show short-term price volatility has disturbed market sentiment. With weak end-user demand and blocked cost transmission, impacts vary across industry segments. Meanwhile, sharp oil price swings are accelerating the electrification of commercial vehicles, rapidly reshaping the energy landscape in transportation.

## First-Ever Temporary Controls on Domestic Oil Prices

Refined oil prices have long followed the existing adjustment mechanism, and this is the first intervention since the 2013 framework was implemented.

Per liter, gasoline and diesel rose approximately **0.87 yuan and 0.95 yuan** after controls, or about **0.85 yuan less** per liter than without regulation. For private car owners with 50–60-liter tanks, filling up costs **42.5–51 yuan less**. For heavy truck drivers with 400–600-liter tanks, savings amount to **340–510 yuan per full tank**.

Wang Zengye, Chief Economist at CNPC Capital, told Shanghai Securities News that the lag in domestic price adjustments helps smooth volatility. Reducing refining margins, slowing increases, or subsidizing specific industries during periods of extremely high oil prices can effectively cushion downstream impacts.

Since 2026, China’s maximum retail prices for refined oil products have undergone six adjustments. After this round, gasoline and diesel prices are **2,320 yuan and 2,235 yuan per ton higher** than at the end of 2025.

The adjustment is directly linked to high international oil prices. During the pricing cycle (midnight March 9 to midnight March 23), international oil prices fluctuated upward, with average prices notably above the previous cycle.

“The trajectory of the U.S.-Israel-Iran conflict is the key factor driving international oil prices,” said an expert at the NDRC Price Monitoring Center.

## Outlook

Wang Zengye noted that if a substantial ceasefire is reached, or military actions remain symbolic without disrupting core oil infrastructure and Strait of Hormuz shipping, and OPEC+ proceeds with planned production increases, the geopolitical risk premium will fade quickly, and oil prices will return to equilibrium. If the conflict remains limited to airstrikes and reprisals without blocking key waterways or destroying major refineries, prices will stay high and volatile.

“In the long run, the global oil supply-demand structure has not materially changed,” analyzed Yang Hanfeng, retired vice president of Royal Golden Eagle Group China. He expects international oil prices to revert to a rational range of **$60–80 per barrel** in 2026 once geopolitical tensions ease.

Zhong Jian, senior researcher at 52hz Information, agreed that the recent rally is driven by war risk premiums and market sentiment. This premium could unwind rapidly if tensions de-escalate.

The next price adjustment window opens at midnight **April 7, 2026**. Third-party institutions generally expect another domestic price increase.

Xu Peng projected that based on current oil prices, the crude oil change rate may start positive in the next cycle, supporting an estimated increase of about **650 yuan per ton**, with room for further widening. If the next hike remains large, additional state-level controls cannot be ruled out.

The NDRC’s Lyu Zhichen noted that during the 2022 Ukraine conflict, domestic prices were frozen for up to two months when international oil exceeded $130 per barrel, with temporary subsidies for refiners.

## Industry Chain Transmission

Upstream, refiners and fuel sellers face mixed fortunes. Wholesale prices surged 20.48% for 92# gasoline and 23.30% for 0# diesel between March 9 and 23, according to Longzhong Information. However, many domestic refineries have cut operating rates due to feedstock shortages, with some Shandong independent refiners expected to run out of crude by late April.

Downstream, some wholesalers reported manageable profit pressure as both purchase and retail prices rose.

He Shun Petroleum, a listed fuel retailer, said high oil prices slightly affect demand but leave rigid consumption stable. A northern China fuel distributor maintained low-to-mid inventory levels and rolling purchasing to avoid price risks.

Institutions note the domestic market remains oversupplied with ample inventories. The long-term trend is peaking oil demand due to rising new energy vehicle penetration.

Gasoline stations face short-term margin pressure as wholesale-retail spreads narrowed sharply. Retail profits per ton fell by **1,016 yuan for gasoline and 747 yuan for diesel**, according to Longzhong’s Xia Wenhong.

## Logistics Freight Costs

Transportation bears the brunt of higher fuel costs. Zhuochuang Information estimates that every 10% oil price rise reduces gross margins for small logistics firms and drivers by 3–5 percentage points. Higher oil also lifts packaging and plastic costs for express delivery.

Major courier companies rely on diesel trucks for long-haul routes. YTO Express noted cost pressure on trunk lines. ZTO’s 2025 report showed trunk transport accounted for 28.5% of revenue; the company optimizes loads and routing to control costs.

Xu Yong of the China Communications and Transportation Association said fuel costs per parcel average ~0.05 yuan, manageable internally. If costs exceed 0.1 yuan per parcel for over 10 months, companies will pass on increases.

No major freight hikes have occurred yet. Industry experts expect moderate price increases this year amid anti-involution policies, led by e-commerce parcels.

In the short term, couriers can optimize routes and train drivers to save fuel; longer-term solutions include digitalization and new energy fleets. New energy vehicles may exceed **40%** of delivery fleets in 2026.

## Acceleration of “Electricity Replacing Oil”

Volatile oil prices are boosting the appeal of new energy commercial vehicles.

Sinotruk reported strong demand for its electric tractors, dump trucks, and light trucks used in short-haul bulk transport, construction, and urban logistics across multiple provinces.

China’s new energy commercial vehicle sector boomed in 2025, with sales of **871,000 units (+63.7% YoY)** and penetration reaching **26.9%**.

In January–February 2026, sales reached 78,000 units. Foton Motor expects 2026 sales of 4.25 million commercial vehicles, with new energy penetration exceeding **35%**.

FAW Jiefang aims to lift new energy commercial vehicle sales from 44,000 in 2025 to **75,000 in 2026 (+70%+)**.

Cost advantages are compelling. A diesel heavy truck traveling 150,000 km yearly incurs ~**427,500 yuan** in fuel costs, while an electric equivalent costs only ~**108,000 yuan** in electricity — saving **319,500 yuan annually** on energy alone.

Cui Dongshu of the China Passenger Car Association said electric heavy trucks reduce diesel dependence and cut oil import reliance. Stable domestic electricity prices insulate transport costs from global oil volatility, accelerating the shift from “oil-dominant to electricity-dominant” energy use in transportation.

Veteran auto analyst Gu Yatao predicted China’s commercial vehicle electrification will maintain global cost advantages, strengthening the competitiveness of domestic manufacturers.

Source: Shanghai Securities News

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