Officials in China have confirmed they will reform the mechanism for pricing ex-refinery jet fuel in the country in an attempt to more closely mirror market movements.
According to the National Development & Reform Commission (NDRC) ex-refinery prices will be adjusted once a month from August and will be based on post-tax import costs for the fuel plus a premium.
“The revamped jet fuel pricing is one big step towards a market-oriented system,” explained a NDRC statement.
“It is also an experiment for reforming China’s refined fuel market.
It is hoped such a link will allow China to a situation whereby domestic prices lag behind international market prices and refiners lack the incentive to produce.
The move came shortly after Beijing cut import tariffs for aviation fuel to zero, a move that helps cut the import cost and makes it easier for oil firms to raise imports when needed.
The import tariff on aircraft fuel was previously set at six per cent.