Analysis of the Reasons for the Continued Rise in Fuel Prices
Date:2026-05-19
1. Geopolitical Conflicts Leading to Supply Disruptions
Since the beginning of this year, the ongoing geopolitical tensions in the Middle East, particularly the risks posed by the Strait of Hormuz, a key energy corridor, have directly pushed up international oil prices. Brent crude oil surged to $112 per barrel in March, and although it has recently retreated somewhat, it remains near the high level of $100.
2. "Refining Bottlenecks" Become a New Engine for Price Increases
This is the most noteworthy characteristic of this round of price increases. Even with crude oil prices temporarily stabilizing, refined oil prices are still soaring. Data shows that refined oil prices are rising three times faster than crude oil prices.
Reason: Global refining capacity is experiencing bottlenecks. With limited crude oil reserves, refineries are forced to prioritize the production of more profitable jet fuel, leading to a squeeze on the supply of gasoline and diesel.
Result: The profit margin for producing jet fuel (cracking spread) has soared to a historical extreme level of $80 to $100 per barrel.
Future Outlook: Good News and Risks Coexist
Good News: Cost Pressures Expected to Ease in June
Recently, Singapore jet fuel prices have fallen from a high of $230 per barrel to around $150. Since China's fuel pricing mechanism lags behind overseas prices by about a month, this means that domestic aviation fuel costs and fuel surcharges are expected to decrease in June. Furthermore, the May 21st refined oil price adjustment window also indicates a downward adjustment is anticipated.
Risk: Government Control "Ceiling" Remains
If the situation worsens and crude oil prices exceed $130 per barrel, the domestic refined oil price "ceiling" mechanism will be activated, and in principle, no further increases will be made, or temporary subsidies will be provided to refining companies to ensure social stability.
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