China has raised fuel prices for the second time in less than six weeks, easing pressure on its largest oil companies.
The National Development and Reform Commission, which sets fuel prices, said Monday it would raise retail gas prices by 600 yuan ($95) a metric ton, leading to an average pump price hike of 6 to 7 percent.
The move -- set to raise pump prices on diesel to about $1.22 per litre and 90-octane gasoline $1.17 -- will also aid the country's largest oil companies, Sinopec, China National Offshore Oil Company (Cnooc) and Petrochina, which all are forced to buy oil and gas at market prices but sell at the reduced domestic rates.
According to a Dow Jones Newswires report, low domestic fuel prices resulted in Sinopec losing $3.65 billion and PetroChina losing $6.57 billion from refining in the first three quarters of 2011.
The hikes are due to high global oil prices, which dropped slightly to $106 a barrel on Tuesday, and China's increasing dependence on imported oil, an NDRC spokesman told the People's Daily newspaper.
The hike comes as fears lessen over China's inflation, which peaked at around 6 percent in mid-2011, sparking concerns of civil unrest.
This is a result of surging global crude prices and easing domestic inflationary pressures, Liao Kaishun, an analyst at industry consultancy C1 Energy, told Agence-France Presse.
The NDRC might also have done it out of consideration for energy conservation and emission reduction, for which low resource prices will certainly do no good, he said.
Last month inflation fell to 3.2 percent following a number of monetary tightening measures.
Inflation appears to have subsided, providing room for the second oil price hike (this year), Australia and New Zealand Banking Group said in a research note Tuesday, according to AFP.
The direct impact on CPI (consumer price inflation) will be manageable at this stage.