At 24:00 on September 11, China's refined oil product prices entered a new round of adjustments. The National Development and Reform Commission announced that, while maintaining the framework of the current pricing mechanism, temporary regulatory measures have been implemented on domestic refined oil product prices. According to calculations based on the existing mechanism, gasoline and diesel prices per tonne were slated to rise by 435 yuan and 420 yuan respectively in this round. However, following the regulatory adjustment, the actual increases were set at 260 yuan and 250 yuan. For a typical small private car with a 50-litre fuel tank, refueling will now cost 10 yuan more per full tank.

This marks the third time this year that the country has implemented temporary controls on refined oil product prices, with the previous two instances occurring on March 23 and April 7. All three interventions were introduced amid abnormal surges in international oil prices, serving as temporary measures to mitigate the impact on the domestic market.

The direct trigger for this round of adjustments is the sudden escalation of the situation in the Middle East. Recently, the Houthi forces in Yemen have engaged in fighting on multiple frontlines against the Saudi-led coalition and Yemeni government troops. Saudi Arabia has come under attack, leading to a major escalation in the Yemeni conflict. As a result, international crude oil prices have continued to climb sharply, particularly with another abnormal surge observed in Middle Eastern crude prices.

On September 10, international oil prices rose significantly. By the close of trading that day, light crude oil futures for October delivery on the New York Mercantile Exchange settled at $102.48 per barrel, up 6.69%. London Brent crude oil futures for November delivery closed at $107.63 per barrel, an increase of 6.34%. Both benchmark crude prices hit their highest levels since May 19 and recorded their largest single-day gains in nearly two months.

Where to Begin

The recent spike in global crude prices, now firmly above the $100 mark, has prompted swift action from Chinese authorities. While the adjustment mechanism remains intact, the government has chosen to cushion the blow for consumers, resulting in a smaller-than-expected increase at the pumps.

Scope of the Intervention

This latest measure is part of a broader strategy to stabilize domestic markets during periods of international volatility. The pattern of intervention, seen now three times this year, highlights a careful balancing act between aligning with global price signals and shielding the domestic economy from sudden external shocks.

Immediate Catalyst

The conflict in Yemen, with attacks on Saudi Arabia, has injected significant risk premium into the market. This geopolitical tension is the immediate reason for the rapid price acceleration observed over the past few days, and it remains a key factor to watch for future price direction.