BEIJING (The Straits Times/ANN): Ride-hailing driver Zhang Wuyou took comfort in having filled up his tank hours before fuel prices rose in China at midnight on March 24.
A few hours later, and he would have paid about 45 yuan (S$8) more for that 50 litre tank – roughly the cost of two bowls of Shanxi knife-shaved noodles, which keep him going between runs, just as petrol keeps his car running.
“Business is so bad now that every yuan counts,” he told The Straits Times. “These days, I don’t bother cruising the streets for customers.”
“By the time I pick up someone, I would’ve spent more on fuel than what I can earn from that trip,” he lamented.
Despite his gripes, Zhang is at least thankful for one small mercy – China’s top economic planner has stepped in to soften the blow of surging oil prices.
On March 23, the National Development and Reform Commission (NDRC) invoked a 13-year-old emergency provision for the first time to cap the rise in retail fuel prices, blunting the pass-through of global oil gains.
Since the US-Israeli strike on Iran in late February, the conflict has almost brought traffic through the Strait of Hormuz to a standstill.
The disruption to this choke point, which carries about a fifth of global oil supply, has sent prices soaring, with Brent crude surging past US$110 a barrel.
As the world’s largest oil importer, China is acutely exposed. It relies on imports for 70 per cent of the oil it consumes, with roughly half of these supplies passing through the strait.
Yet, Beijing appears to be better placed than many other countries to weather the shock.
Because China’s main oil companies are state-owned, they must comply with the price cap, absorbing part of the higher costs themselves.
Under China’s pricing mechanism, fuel prices are adjusted every 10 working days in line with international crude benchmarks, but regulators can step in when swings are too sharp. Beijing had not previously activated this intervention provision since it was introduced in 2013, not even during the 2022 oil spike triggered by Russia’s invasion of Ukraine, noted consultancy firm Trivium.
When it finally did so in March, the NDRC capped the increase at roughly half what it could be under a formula. Petrol prices rose 1,160 yuan to 9,905 yuan per tonne, instead of rising 2,205 yuan, while diesel rose 1,115 yuan to 8,835 yuan, compared with a 2,120 yuan rise.
This translates to about 0.90 yuan more per litre for 92-octane petrol.
The NDRC’s move is merely a Band-Aid. Beyond the emergency price cap lies a decades-long effort by Beijing to insulate the world’s second-largest economy from the volatility of global energy markets.
One pillar of its strategy is stockpiling. Since the early 2000s, China has built up strategic and commercial oil reserves.
Columbia University’s Center on Global Energy Policy estimates that as at March 2026, China holds about 1.39 billion barrels in storage – enough to cover roughly 120 days of imports at 2025 levels.
This exceeds the 90-day requirement for International Energy Agency members, though China is not part of the group.
Another pillar is diversification. China draws crude from a broader mix of suppliers, with Russia now its biggest source. It imports about 45 per cent to 50 per cent from the Middle East, far below the roughly 90 per cent for Japan and 70 per cent for South Korea.
Beijing also gets preferential treatment from Teheran. Iranian authorities have allowed ships from “friendly” countries, including China, to continue transiting the strait under specific coordination arrangements. At least three ships from China have passed.
At the same time, China has been reducing its reliance on oil altogether. Years of heavy investment in wind and solar have reshaped its power mix. Non-fossil sources now account for about 55 per cent of installed power capacity and generate more than a third of total output.
Its grid, anchored by domestic coal and renewables, is able to meet more of the demand, including from electric vehicles (EVs), whose widespread adoption has reinforced China’s electrification shift.
For more than a decade, Beijing has promoted EVs through subsidies, licence plate restrictions and charging infrastructure. EVs and plug-in hybrids now account for roughly half of new car sales. This has displaced oil demand equivalent to China’s total imports from Saudi Arabia, which is about 1.8 million barrels per day, according to estimates from the Centre for Research on Energy and Clean Air.
Taken together, these measures help explain the orderly queues that formed at petrol stations on the evening of March 23, with no scramble to hoard fuel.
For now, the impact of the global oil shock has yet to cascade throughout wider Chinese society. Most urban commuters find the higher fuel cost tolerable.
The pain is concentrated in the transport sector. Ride-hailing and truck drivers, whose margins are thin to begin with, are feeling the pinch.
Speaking to ST at a service station outside Beijing, Mr Lu, a long-haul truck driver who gave only his surname, said the fuel hike is just one of many pressures weighing on his livelihood.
Asked if he blames the US – for tariffs and the Iran crisis that have squeezed profit margins and pushed up fuel costs – he shrugged.
“Those don’t affect me as much,” he said. “It’s my own government’s policies that hit the hardest.”
He looked somewhat agitated as he told this reporter about new anti-fatigue rules, which require drivers to stop every four hours and leave their vehicles for at least 20 minutes.
While intended to improve road safety, the policy has made long-haul runs longer. Videos on social media have shown drivers waiting out the mandatory breaks in the rain.
“But what can we do?” Mr Lu said. “Life has gotten harder, but we’ll just have to deal with it.” - The Straits Times/ANN
