Cajeput Oil

Diesel Market Intelligence Report (July 29, 2026)

I. Recent Price Trends
1. International Markets
- Brent Diesel Futures: Closed at USD 1,195.0 per metric ton for the week ending July 24, representing a weekly gain of 5.85%. The price reached a high of USD 1,243.75 and a low of USD 1,105.5 per metric ton, with a weekly average of USD 1,183.30 per metric ton.
- Domestic Futures Market: On July 28, diesel futures traded at USD 1,161.45 per metric ton, down USD 11.30 (–0.96%) from the previous day, with an intraday volatility of 2.60%.

2. Domestic Wholesale Market
- National Average Wholesale Price: RMB 7,695 per metric ton as of July 24—up RMB 87 from the prior day—driven primarily by escalating Middle East geopolitical tensions, which pushed international crude oil futures sharply higher and strengthened market expectations for an upcoming domestic retail fuel price adjustment.
- Regional Variations: Significant price increases were observed in Sichuan, Shaanxi, Beijing, and Guangdong provinces. Prices for 0# diesel from Shandong independent refineries exhibited frequent fluctuations (e.g., quotations as of July 22 require real-time verification).

3. Retail Market
- Guangdong Province’s Highest Retail Price: RMB 6.83 per liter for 0# diesel (Grade VI), RMB 7.20 per liter for 92-octane gasoline, and RMB 7.80 per liter for 95-octane gasoline (effective following the adjustment on July 3).
- Zhangjiakou City, Hebei Province: The retail price for 0# diesel remained stable at RMB 6.82 per liter from July 10 to 17, unchanged from the base period.

II. Supply-Demand Fundamental Analysis
1. Supply Side
- Domestic Production: Diesel output in June totaled 13.2493 million metric tons, down 7.52% month-on-month. This decline was mainly attributable to a drop in primary refinery utilization rates to 63.67%—the lowest level since March 2020—and voluntary production cuts by refiners amid sustained refining margin losses.
- Imports & Inventory: Diesel exports remained subdued in May; growth is expected in June, but rising beginning-of-month inventories partially offset the reduction in overall supply. The June supply-demand gap is preliminarily estimated at 51.7574 million metric tons, down 0.47% MoM, indicating a slight easing of oversupply pressure.
- Regional Supply: Frequent price adjustments by Shandong independent refineries reflect their flexible operational strategies to adapt to rapidly shifting market conditions.

2. Demand Side
- Domestic Consumption: Diesel demand in June stood at 13.0957 million metric tons, down 2.27% MoM and 12.89% YoY. Agricultural diesel consumption (e.g., during the “Three Summers” farming season) saw a concentrated release, but no significant follow-up demand emerged. Industrial, mining, infrastructure, and logistics transportation demand remained weak.
- Substitution Effect: New-energy heavy-duty trucks—including LNG- and battery-electric-powered commercial vehicles—continue exerting downward pressure on diesel demand. Substituted diesel volume from alternative energy sources reached 22.7 million metric tons in 2023 and is projected to exceed 25 million metric tons in 2024.
- Seasonal Factors: Although July marks the summer vacation period—boosting self-drive tourism—the positive impact of elevated temperatures on diesel consumption remains limited.

III. Policy and Cost Impacts
1. Refined Fuel Pricing Mechanism
- Effective 24:00 on July 17, domestic gasoline and diesel prices were increased by RMB 300 and RMB 290 per metric ton, respectively, reflecting the upward trend in international crude oil prices over the preceding 10 working days relative to the prior adjustment benchmark.
- On July 3, gasoline and diesel prices were reduced by RMB 950 and RMB 915 per metric ton, respectively—demonstrating the mechanism’s responsive alignment with international oil price volatility.

2. International Crude Oil Costs
- Escalating Middle East geopolitical tensions drove sharp increases in Brent crude oil futures prices on July 23, directly transmitting cost pressures to the domestic diesel segment.
- Refining costs remain elevated, while downstream demand remains sluggish—further constraining refiners’ willingness to ramp up production and limiting potential supply growth.

IV. Market Sentiment and Short-Term Outlook
1. Short-Term Price Trends
- International Markets: Brent diesel futures are likely to remain range-bound at elevated levels in the near term, influenced by geopolitical developments and supply-demand dynamics. Key watch points include OPEC+ production policy decisions and U.S. Strategic Petroleum Reserve release plans.
- Domestic Markets: Wholesale prices are supported by rising international crude oil prices and heightened expectations of another retail price hike—suggesting short-term strength. However, weak underlying demand may cap upside potential, narrowing the wholesale-retail price spread.

2. Supply-Demand Balance Forecast
- Supply: With peak refinery maintenance season concluding in July, utilization rates may rise modestly—but refiners’ continued reluctance to increase output will constrain supply growth.
- Demand: Summer travel and high temperatures are providing only marginal uplift to diesel consumption. Recovery in industrial, mining, and infrastructure demand remains sluggish, while persistent substitution from new-energy heavy-duty vehicles continues to suppress traditional diesel demand.
- Balance: The supply-demand gap is expected to remain elevated, albeit slightly narrower than in June, resulting in a more compressed price volatility range.

3. Key Risk Factors
- Escalation of geopolitical conflict in the Middle East could trigger a sharp surge in international crude oil prices, further inflating domestic diesel costs.
- Underperformance of domestic economic stimulus policies may prolong weakness in industrial, mining, and infrastructure demand.
- Accelerated penetration of new-energy heavy-duty trucks could further erode diesel consumption share.