International Oil Prices Drive Domestic Oil Products To Rise For Three Consecutive Times

With the failure of the meeting of the organization of Petroleum Exporting Countries (OPEC +) and its allies of oil producing countries (OPEC +), the international oil price dropped slightly after a short-term surge, but it was still at the high level in recent years.

Driven by the international oil price, the retail price limit of domestic refined oil products continued to rise, ushering in a wave of "three consecutive rises", and the oil price rose significantly in the year.

With the steady recovery of international crude oil demand, the divergence between Saudi Arabia and UAE, the two major oil producing countries in the Middle East, continues. Where will OPEC + lead the oil market?

Domestic refined oil price rises for the 10th time in the coming year

The national development and Reform Commission (NDRC) announced that from 24:00 on July 12, the retail price limit of domestic gasoline and diesel oil has been raised according to the mechanism, including an increase of 70 yuan / ton for gasoline and 65 yuan / ton for diesel oil. In terms of price increase, the retail price limit of 92 gasoline was increased by 0.05 yuan / L, and the retail price limit of 95 gasoline and 0 diesel was increased by 0.06 yuan / L.

After this round of price adjustment, the price of vehicle diesel in most parts of China will remain at around 6.9-7.0 yuan / L, and the retail price limit of No.92 gasoline will be around 6.9-7.1 yuan / L, and the fuel cost of car owners will be slightly increased.

If the fuel tank capacity of a private car is 50 liters, it will cost about 2.5 yuan more to fill a tank of 92 gasoline; For large logistics vehicles with full load of 50 tons, the fuel cost will increase by about 2.4 yuan per 100 km.

This round of price adjustment is the tenth increase in the retail price limit of refined oil products in the year, and also the third consecutive rise since the oil price of finished products ran aground on May 28. Since this year, domestic refined oil retail price limit has gone through 13 rounds of price adjustment cycles, showing a trend of "ten up, one down and two stranded".

Since 2021, the international oil price has increased significantly, which has led to the continuous rise of domestic product oil price, thus significantly increasing the travel cost of consumers. According to the statistics of Zhuo Chuang information, after offsetting the rise and fall, the cumulative increases of domestic auto and diesel retail price limits since this year are 1475 yuan / ton and 1420 yuan / ton respectively; In terms of price increase, the price of No.92 gasoline rose by 1.16 yuan / L, the price of No.95 gasoline increased by 1.22 yuan / L, and the price of No.0 diesel oil increased by 1.21 yuan / L.

In terms of domestic refined oil market, with the end of centralized maintenance period of domestic refineries, the supply of domestic refined oil resources increased; In June, a consumption tax was imposed on imported gasoline and diesel feedstocks such as mixed aromatics and light cycle oil. Domestic refineries also reduced export quotas to fill the market gap.

With the increase of retail price limit of refined oil, the wholesale and retail price difference of gasoline and diesel oil has further expanded compared with the previous period, and the profit margin of gas stations has also continued to increase.

Li Chunyan, an analyst with Longzhong information, said that although the current gasoline demand is relatively stable, the overall price has been at a high level, and the enthusiasm of the middle and lower reaches to store up goods is not high; And diesel demand continues to weaken, the market trading center of gravity also moved down slightly.

International oil prices soar and fall

Since this round of pricing cycle, the rebound of the epidemic situation in many places around the world has cast a shadow on the prospect of crude oil demand. However, the soaring demand for fuel oil and the sharp decline of crude oil inventory in the United States have brought good news to the market.

In the past cycle, the most influential event in the global crude oil market was the production control meeting held by OPEC +.

On July 1, the regular ministerial meeting of OPEC + was held in Vienna. The oil producing countries led by Saudi Arabia and Russia are ready to further relax the current crude oil production restrictions and increase the crude oil supply of the organization.

Since this year, with the recovery of the global economy and the lifting of blockade measures around the world, the global demand for crude oil has been growing steadily, and has been accelerating in the near future. Under the influence of demand growth and limited supply growth, the international oil price rose significantly. WTI crude oil and Brent crude oil futures station reached a three-year high of $70 / barrel.

After several days of contact and consultation, all parties have reached a consensus on increasing crude oil production by 400000 barrels / day per month from August to December this year, and increasing crude oil production by 2 million barrels / day by the end of this year. However, the differences between Saudi Arabia and the United Arab Emirates, the two major oil producing countries in the Middle East, have not been resolved. After several days of postponement, the OPEC + round of production increase meeting was officially concluded on July 6, and all parties at the meeting did not reach any new production increase agreement.

Saudi Arabia insists on extending the production reduction agreement, which was due to expire in April 2022, to December 2022; However, the UAE has proposed to recalculate the production reduction benchmark to reflect its real production capacity and further increase crude oil production.

Market participants had predicted that even if OPEC + finally reached a small increase in production agreement, it would still be unable to meet the growing market demand for crude oil; With the failure of the OPEC + meeting, the tight situation of crude oil supply continued, and the international oil price rose rapidly in a short time. Among them, Brent crude oil futures price reached the highest level of 77 US dollars / barrel, which continued to set a new high in the past three years; WTI crude oil futures prices once stood at 76 U.S. dollars / barrel, a six-year high.

Tight supply and demand support oil prices, but the differences between Saudi Arabia and the United Arab Emirates have not been resolved, which also caused the market to worry about OPEC + Organization falling into disorder again; In addition, U.S. President Biden also urged Saudi Arabia and the United Arab Emirates to resolve their differences as soon as possible and reach a consensus on increasing production in response to curbing the rise of oil prices. International oil prices fell after surging higher.

Since then, although the international oil price jumped sharply on July 9, the overall oil price level has not reached the previous high. As of July 10, Beijing time, WTI crude oil futures for August delivery rose 2.22% to close at $74.56/barrel; Brent crude for September delivery rose 1.93% to close at $75.55/barrel.

Where will OPEC + lead the oil market?

The recovery of the epidemic situation has led to a rapid recovery of the crude oil market, but the actions of OPEC + organizations are still one of the most important factors affecting the oil market.

For a long time, Saudi Arabia and the United Arab Emirates have been solid allies in the Middle East and OPEC. However, with the highlight of national interests, differences between the two sides on issues such as Israel, Yemen, epidemic management and regional economic competition have become increasingly obvious.

In addition, Saudi Arabia tends to adjust market changes through collective production reduction and increase, but UAE has repeatedly questioned the impact of production reduction on OPEC + member countries' income and market share; In addition, the UAE has been committed to increasing oil and gas production capacity in recent years. It believes that the original production reduction baseline has greatly limited the UAE's crude oil production, that is, the UAE has made the most sacrifice in the reduction.

Many international institutions continue to talk more about crude oil. In the case of tight supply, the institutions expect that the international oil price may soar to $80 / barrel or even above $90 / barrel, but there are risks at the same time. In March 2020, the memory of a new outbreak and oil price war that finally defeated the global crude oil market has not disappeared. Saudi Arabia and the United Arab Emirates' unrequited concessions have brought about concerns about OPEC +.

Xi Jiarui, an analyst of jinlianchuang crude oil, pointed out that even if the "price war" did not break out, the market should not be too blind and overly optimistic about the follow-up trend of crude oil; Since this year, economic activities in various countries have recovered from the impact of the epidemic, and the energy demand driven by the global economy has recovered more than expected. Although the world's rich and developed countries are at the forefront of the world in terms of vaccination and economic restart, the new crown is still rampant in many poor countries, which are unlikely to follow the U.S. unsealing measures.

Xi Jiarui said that in addition, the delta mutant strain has brought variables to the global epidemic situation prospect, and the demand prospect of the oil market is still very uncertain.

Although the date of the next OPEC + meeting has not yet been set, oil producing countries are likely to restart negotiations at any time as market conditions change.

Xu Na, an oil product analyst at Zhuo Chuang information, pointed out to the 21st century economic report that the current OPEC + meeting has not yet made clear the direction, the market remains cautious, but the oil market is in a correction, but the strength is limited, and the oil price is waiting for the direction of consolidation.

Li Yan, an oil analyst with Longzhong information, pointed out that according to the current international oil price calculation, the next round of refined oil price adjustment cycle will show an upward trend at the beginning, with the range of about 30 yuan / ton; At present, the summer travel peak in the United States continues to boost fuel demand, while the growth rate of the global epidemic situation slows down. The economic data shows a stable performance and the demand is better.

"Although the internal differences of OPEC + have not been resolved, the risk of a price war is not big. In addition, the negotiations on the nuclear issue between the United States and Iran are still deadlocked, and it is expected that the next round of oil price hikes will be more likely." Li said.