China will not cut its domestic retail fuel prices when international oil prices fall below 40 U.S. dollars a barrel, the country's economic planner said on Wednesday.
Previously, China set a ceiling for domestic retail fuel prices, which will not be raised if international oil prices rise above 130 U.S. dollars per barrel.
The floor and ceiling aim to buffer the negative effects of violent fluctuations in international oil prices, according to the National Development and Reform Commission (NDRC).
The latest reforms aim to improve China's oil pricing mechanism, which was introduced in 2013.
Following the new rule, the NDRC on Wednesday announced cuts in the retail price of gasoline and diesel from Thursday. Gasoline prices will drop by 140 yuan (21.34 U.S. dollars) per tonne, while diesel prices will go down by 135 yuan per tonne.
The NDRC has suspended price adjustments of domestic refined oil products twice since Dec. 15, awaiting the changes.
Under the updated mechanism, China will adjust domestic prices of refined oil products when international crude prices translate into a change of more than 50 yuan per tonne for gasoline and diesel for a period of 10 working days, but will not do so if the international prices go below 40 U.S. dollars or above 130 U.S. dollars a barrel.
