Tardy oil price cut due to pricing mechanism
China has yet to cut its oil prices despite the recent plummet of international oil pirces, since the country's oil prices depend on its oil-pricing mechanism, the Beijing News reported China Petroleum Co (Sinopec Group) as saying.
According to the current pricing mechanism, the price of domestic crude oil is adjusted only when the average price change of Brent, Cinta, and Dubai crude oil reaches the limit of 4 percent for 22 working days on end.
Recent changes of crude oil prices have been small and have yet to reach the limit, though international oil prices have continued to fall.
China's pricing mechanism is strategically designed to maintain a steady domestic oil price. Gasoline and diesel oil are widely used in China, so frequent price fluctuation would largely influence industrial and agricultural sectors.
