China’s fuel pricing system, which depressed Sinopec’s oil refining margin, should be revamped to more closely track price changes in international crude oil, a Sinopec official who heads a refining unit said.

“Current domestic prices for refined oil products correspond to a crude oil price of slightly more than $70 a barrel,” Yu Xizhi, president of Sinopec’s Anqing refinery, told Reuters on the sidelines of China’s annual legislation meeting where he was a delegate.

“We were not making losses now but the margin was squeezed ... the government should have raised fuel prices if pricing policies had been strictly followed.”

China last raised retail prices for gasoline and diesel by around 7 per cent on November 10 when US light crude prices were around $78 a barrel, but Beijing indicated then that the hike could not cover the rises in crude costs.
US crude closed up 1.6 per cent at $81.5 a barrel.