China Seeks to Lower Fuel Price Increases as Other Asian Countries Raise Prices, Why?

BEIJING, KOMPAS.com - China plans to reduce the increase in fuel prices. This effort is aimed at alleviating the burden on drivers, as energy costs surge amid the Iran war. Meanwhile, other countries in Asia are in the process of adjusting fuel prices while assessing the ongoing impact of the Iran war. Iran has effectively closed one of the world’s busiest oil shipping routes, the Strait of Hormuz. Petrol and diesel prices were initially set to rise by 2,205 yuan (equivalent to Rp 5.40 million at an exchange rate of Rp 2,453 per yuan) and 2,120 yuan (equivalent to Rp 5.20 million) per tonne, respectively. However, following government adjustments, the increases will be nearly halved to 1,160 yuan and 1,115 yuan. The country’s main oil sources are from Gulf companies involved in the conflict. Long queues of cars formed outside petrol stations in various cities in China over the weekend, and some stations had to post notices of fuel shortages. Note that China has raised fuel prices five times this year. On Tuesday, Brent crude oil prices surged above $100 per barrel, or a day after prices plummeted. This comes alongside conflicting reports on potential talks between the US and Iran. Saxo Bank’s Head of Commodity Strategy, Ole Hansen, said that for years, the Chinese government has utilised lower crude oil prices and abundant supplies from Gulf countries to build one of the world’s largest oil reserves. Iran, whose oil is sanctioned by the US, has been a major supplier of cheap crude oil to China, with reports showing that Beijing buys more than 80 percent of Iran’s oil exports. Hansen said an estimate shows China has built reserves of around 900 million barrels. That amount is equivalent to three months of imports. Figures from Columbia University indicate China has oil reserves of around 1.4 billion barrels.