SunSirs: January 2026 Gasoline and Diesel Price Trends Diverge

The export arbitrage window for gasoline and diesel remained open in January 2026, primarily because domestic diesel prices fell more sharply than gasoline prices, while international diesel prices rose more than gasoline prices. Diesel export profits are expected to struggle to expand further in February, while gasoline export arbitrage opportunities remain limited.

International Crude Oil Prices Rise Month-on-Month but Fall Year-on-Year

International crude oil prices fluctuated upward in January, primarily due to supply constraints from South American oil, escalating tensions in the Middle East, slower-than-expected progress in Russia-Ukraine peace talks, and frequent geopolitical disruptions. Market concerns over crude supply drove prices to fluctuate upward. Data compiled by Zhuochuang Information shows that in January, the average price of WTI crude oil was $60.29 per barrel, up 4.1% month-on-month but down 19.76% year-on-year. The average price of Brent crude oil was $64.73 per barrel, up 5.0% month-on-month but down 17.4% year-on-year. Influenced by crude oil trends, international gasoline prices fell significantly month-on-month, while diesel prices fluctuated slightly.

Gasoline and Diesel Export Arbitrage Window Opens

Although the average international diesel price narrowly declined month-on-month, it showed an upward trend within the month driven by rising crude oil prices and heightened international tensions. For gasoline, some importing countries slowed their procurement pace, with weakening demand dragging prices down month-on-month. As of January 29, 2025, the international average gasoline price for the month stood at USD 71.33/barrel, down 15.52% year-on-year and 5.92% month-on-month. With the exchange rate declining 0.79% month-on-month, the equivalent RMB average price was approximately RMB 4,332/ton, representing a year-on-year decrease of 17.62% and a month-on-month decline of 6.67%. The average international diesel price for January was $82.08 per barrel, down 14.22% year-on-year and 0.38% month-on-month. Converted to RMB, the average price was approximately CNY4,381 per ton, down 16.36% year-on-year and 1.18% month-on-month. The price spread between international diesel and gasoline in November was around $7-15 per barrel, showing a significant widening compared to the previous month.

The export arbitrage window for gasoline and diesel remained largely open this month, with diesel offering a significantly larger arbitrage opportunity than gasoline. Domestic retail price caps experienced one suspension and one increase, with a new pricing cycle commencing at the beginning of the month, providing some support to market prices. Following the New Year holiday and with the Spring Festival approaching, the market largely anticipated weak diesel demand. Ship order prices retreated, large-scale trade demand remained limited, and sales units implemented “opening-day promotions” to boost volume, causing diesel prices to gradually decline. However, international diesel prices rose moderately, widening the spread between the two. For gasoline, supported by high upstream costs and expectations of improving future demand, sales units showed strong price-holding intentions. Market prices rebounded after a decline. However, while international gasoline prices fluctuated upward, the increase was limited, resulting in a generally narrow price differential.

Market Outlook

For international crude oil, developments in the Middle East and disruptions from extreme cold weather in the U.S. warrant attention. International oil prices may trend weaker, leading to predominantly weak movements in global gasoline and diesel prices. Domestically, gasoline terminal demand is expected to marginally improve around the Spring Festival holiday this month. Increased downstream purchasing activity will support gasoline market prices, with gasoline prices likely to rise. The price differential with international gasoline prices is expected to remain limited. With the holiday approaching, construction and infrastructure projects are scaling back operations, and logistics transportation is unlikely to see significant growth. Overall diesel demand remains sluggish, weighing on prices. However, given that prices have already fallen to relatively low levels, further downside is limited. Overall, diesel export margins in February are expected to remain better than gasoline's, but further expansion is challenging.

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