Refined Oil Pricing Needs Diversification

At present, the call for reform of the domestic refined oil pricing mechanism has come to an end. With market-oriented targets, introducing more reference to oil price standards, reducing administrative intervention, and shortening the price adjustment cycle have become common consensus. The current domestic oil price is focused on crude oil prices in Brent, Dubai and Xinta.
Ren Haoning, a researcher in the energy industry at China Investment Advisors Co., Ltd., said that the introduction of more reference oil prices is due to the reform of refined oil products. The goal of the reform is to promote the link between domestic oil prices and international oil prices, and this necessarily involves the reference system of international oil prices. Therefore, if this reference system is not confirmed, other reforms will become empty talks. It can be seen that the selection of an appropriate reference oil price standard in combination with China’s crude oil import situation is of great significance to the pricing mechanism reform of refined oil products.
The current higher call for reference oil prices is the inclusion of WTI oil prices as a reference standard. WTI crude oil prices are the major oil price standards in the world and have a significant impact on international oil prices. Currently, the price difference between WTI's oil prices and the prices of Brent, Dubai and Xinta continues to widen. This has also led to the gradual derailment of domestic refined oil prices, which are closely linked to the oil prices in the three places, and international oil prices.
Zhang Yanlin, research director of China Investment Consulting Co., Ltd. pointed out that the selection of oil prices should be based on the selection of Chinese crude oil imports. The crude oil prices in the top crude oil importing countries in China should be included in the reference standard, so as to increase the diversification of the reference crude oil prices. A full and true reflection of the cost of domestic crude oil imports is conducive to the formation of a reasonable pricing mechanism for refined oil products.
The "Investment Analysis and Forecast Report of China's Oil and Gas Industry in 2011-2015" released by the China Investment Advisor shows that China's reform of pricing mechanism for refined oil products has undergone many reforms, and the degree of marketization has been continuously improved, and the international oil prices are constantly in line. But overall, the current pricing mechanism still can not fully reflect the changes in the market oil prices, and there is a big gap between the actual marketization.

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