China slashes retail oil prices as global oil prices plunge amid COVID-19 fear
A gas station in Fuzhou, Fujian Province, February 19, 2020. /VCG

A gas station in Fuzhou, Fujian Province, February 19, 2020. /VCG

China will cut retail ceiling prices for gasoline and diesel starting on Wednesday following the plunge of the global oil prices affected by the spread of COVID-19, said the country's top economic planner.

The prices of gasoline and diesel will be cut by 1,015 yuan (about 145 U.S. dollars) and 975 yuan per ton respectively, said the National Development and Reform Commission (NDRC) on Tuesday.

The reduction is the biggest since 2013 when the country introduced the new oil pricing mechanism.

The retail oil prices will be reduced to a level corresponding to 40 U.S. dollars a barrel, which is the floor set by the Chinese government based on the current pricing mechanism, said Peng Shaozong, an official with the NDRC, during a press conference. And the part below 40 U.S. dollars will not be adjusted, Peng added.

The NDRC said it will monitor the performance of the current pricing mechanism in response to fluctuations in the global market.

Three major Chinese oil giants, including China National Petroleum, China Petrochemical and China National Offshore Oil, should organize the production and transportation of refined oil products to ensure a stable supply and strictly implement the pricing policy, said the NDRC.

Global oil plunged by more than 11 percent on Monday dragged by fears of the spread of COVID-19 that could dampen global crude supply. U.S. West Texas Intermediate (WTI) crude dropped by 3.03 U.S. dollars to end at 28.70 U.S. dollars per barrel, and Brent crude fell by 3.08 U.S. dollars to end at 30.05 U.S. dollars per barrel.