Recently, international oil prices have continued to fall, and gasoline and diesel prices have also fallen sharply. According to the relevant national regulations, the domestic refined oil price will be adjusted in the middle and late of each month according to the trend of oil prices in the international market. Based on the analysis of various factors, domestic gasoline and diesel prices showed a sharp decline in the middle of this month, or will record the largest single decline this year.
International oil prices continued to fall
The main reason for the sharp drop in domestic oil prices is that international oil prices have continued to decline recently. International oil prices are used as a direct reference basis for domestic oil price adjustments, and their ups and downs often directly affect the adjustment trend of domestic oil prices.
Looking back at the trend of international oil prices since the beginning of this year, it can be found that there has been a continuous downward trend since mid-to-late March. Taking Brent crude oil futures, the core indicator of international oil prices, as an example, it was still at a high level of $79.57 per barrel on March 14, but it had fallen to $77.01 per barrel by May 11, a cumulative decline of about 3.2%. WTI futures, another major reference index for international oil prices, also fell by 3.7% over the same period.
The main reasons for the continuous decline in international oil prices can be roughly summarized as follows:
1. The contradiction between supply and demand has intensified
Recently, the international supply of crude oil has continued to exceed market demand. On the one hand, oil production in major oil-producing countries such as the United States has remained high; On the other hand, due to the slowdown in global economic growth, international oil demand has declined. Oversupply exacerbated the rise in crude oil inventories in the market, pushing oil prices downward.
2. The U.S. dollar index strengthened
As a major international pricing currency, the US dollar index has rebounded and strengthened recently, which has also pushed up the cost of crude oil denominated in US dollars to a certain extent, suppressing the upside of crude oil prices.
3. The demand outlook is not optimistic
The world's major economies have entered a cycle of interest rate hikes, rising debt and financing costs, high inflation, and increased risks of economic slowdown, which have dealt a heavy blow to the outlook for crude oil demand. Coupled with the continuous geopolitical risks, the intensification of the US-China technological confrontation, the weak global economic recovery, and the pressure on crude oil demand declined.
Affected by the above factors, international oil prices have continued to fluctuate downward since the beginning of the year. Under normal circumstances, the adjustment of domestic oil prices will be made about 10 working days after the international oil price trend stabilizes. On April 29, affected by the continued low operation of international oil prices, domestic gasoline and diesel prices have ushered in the seventh reduction of the year, with a reduction of 5-7 cents per liter.
This round of downward revision may hit a new high this year
Looking forward to the domestic refined oil price adjustment window in the middle and late of this month, combined with the continuous sharp decline in international oil prices, it is expected that domestic gasoline and diesel prices will be significantly reduced. According to estimates, this round of reductions may exceed 18-21 points per liter, setting a record for the largest single reduction this year.
Specifically, from April 28 to May 10, the changes in international oil prices were: WTI futures prices in the New York Mercantile futures market fell by 4.02%, and Brent crude oil futures prices fell by 3.76%. According to the current domestic refined oil pricing mechanism, if calculated according to the current international oil price trend, it is expected that the domestic gasoline price will be reduced by about 0.18 yuan/liter at 24 o'clock on May 15, and the diesel price will be reduced by about 0.21 yuan/liter.
That is to say, it is equivalent to a reduction of 235 yuan and 225 yuan per ton of gasoline and diesel, and the overall reduction rate reaches 18-21 cents/liter. This is already the largest decline of the year by all previous records for a single downward revision. It is necessary to remind car owners that this round of oil price adjustment will be the largest price reduction this year.
This adjustment is larger than the previous largest single increase of 200 yuan/ton in the year, which shows that this round of oil price reduction is indeed heavy. Car owners and friends should remind that the middle of this month is a rare low oil price window this year, and if you miss it, you will have to wait until next month.
The sharp drop in oil prices is good for the recovery economy
Obviously, this round of oil price adjustment is a big positive for people and businesses. For ordinary car owners, they can start refueling in the middle of this month to reduce certain travel cost pressures. For enterprises in transportation and logistics and other industries, it will also alleviate the pressure on operating costs to a certain extent. In the medium and long term, the downward movement of refined oil prices will not only directly reduce the expenditure burden of enterprises and households, but more importantly, it will alleviate domestic inflationary pressure and create a better environment for the overall economic development.
First of all, the current round of oil price cuts will alleviate inflationary pressures to some extent. Gasoline and diesel are important consumables for industrial production and people's livelihood, which have a huge impact on the overall price level. If oil prices continue to run at a high level, it will inevitably lead to a continuous rise in costs along all links of the industrial chain, which in turn will push up the CPI and PPI levels. Therefore, the sharp drop in oil prices this round will help curb the transmission effect on the cost side, thereby further suppressing inflation expectations.
Second, the decline in oil prices will ease the cost pressure of residents and enterprises, expand domestic consumption demand, and play a certain role in stimulating the real economy. For the average household, reducing the cost of refueling is conducive to expanding daily consumption expenditure. For enterprises, especially industrial and transportation enterprises, reducing costs and expenditures can help enterprises turn losses or expand profit margins, and create conditions for the reinvestment and reproduction of funds. On the whole, the decline in oil prices will help stimulate domestic consumer demand and promote the development of the real economy.
Third, the decline in oil prices will also be conducive to the country's fiscal balance. On the one hand, the price of refined oil directly affects the purchasing power of domestic residents and enterprises, and then affects their tax revenue; On the other hand, low oil prices are also conducive to reducing input costs such as domestic logistics costs, thereby reducing the pressure on fiscal expenditure. Overall, the decline in oil prices will ease the pressure on the fiscal deficit to a certain extent, making room for expanding effective investment and implementing a proactive fiscal policy.
Finally, a sharp drop in oil prices will also help promote the transition of the global energy landscape to a green and low-carbon landscape. From a global perspective, energy shortage and soaring prices have directly pushed up the investment and exploitation of traditional fossil fuels, which is not conducive to the green and low-carbon transformation of energy. Therefore, this round of oil prices has fallen sharply to green and low-carbon energy