What impact does a $10 increase in international oil prices have on us?

Data News Editors: Wenli, Zhang He (Intern)
New Media Design: Miao Qihui
Proofreading: Liu Jun

The situation in the Middle East has attracted much attention, and international oil prices have risen accordingly. Domestic oil companies China National Petroleum Corporation, Sinopec, and CNOOC have even hit daily limit-ups for two consecutive days, which is rare. The market’s initial reaction was not the conflict itself but energy prices. The conflict is far from ordinary people, but oil prices are very close to daily life.

Why do oil prices fluctuate every time tensions rise in the Middle East?

The answer lies in the supply structure. According to the International Energy Agency (IEA) June 2025 “Oil Market Report,” the global crude oil market is in a “tight balance + spare capacity” structure.

Meanwhile, the Middle East plays a key role on the supply side. Multiple industry reports show that the Persian Gulf oil-producing regions (including Saudi Arabia, Iran, Iraq, UAE, etc.) account for about 30% of global production. More importantly, transportation routes are critical.

The Strait of Hormuz is known as the “world’s oil valve,” connecting the Persian Gulf with the Oman Gulf, and is one of the most important energy channels globally. Although the Strait of Hormuz is not an Iranian inland sea, Iran controls the core deep-water navigation channel of the strait and has the actual military capability to interfere with or block shipping, making it a key variable for global energy security.

According to data, about one in four barrels of oil traded via sea transportation passes through here. Some estimates suggest that if the strait experiences sustained disruption, crude oil prices could quickly incorporate additional risk premiums.

What impact does a $10 increase in international oil prices have on us?

The most direct impact is on gas stations.

Based on historical price adjustment ranges, a $10 per barrel increase in international oil prices typically leads to a retail price increase of about 0.3–0.5 yuan per liter for domestic refined oil (differences may exist across periods).

The latest price adjustment announcement from the National Development and Reform Commission shows that 92-octane gasoline increased by 0.55 yuan per liter, 95-octane gasoline by 0.58 yuan per liter, and zero diesel by 0.57 yuan per liter. For an average family car with a 50-liter tank, filling up with 92-octane gasoline will cost about 27.5 yuan more. Of course, prices won’t double immediately, but they will gradually pass through the adjustment cycle.

Second, there will be changes in product prices at supermarkets.

Rising domestic gasoline prices will directly increase logistics costs, which will then influence the prices of end products.

World Bank research shows that a $10 increase in oil prices can push the overall Consumer Price Index (CPI) up by 0.2–0.4 percentage points. The transmission usually occurs within a quarter. If prices rise by $20 or more, it can bring “inflationary pressure,” and you may feel that your money is not enough.

Additionally, the World Bank estimates that a 10% increase in oil prices could reduce global GDP growth by 0.1–0.2 percentage points.

Although these changes may lag, their impact is widespread. In summary, rising oil prices increase transportation costs, which then affect product prices. If this continues, it could lead to inflationary pressures. Maybe after some time, you’ll notice that supermarket prices have gone up.

Besides affecting daily life, it also directly impacts your investment accounts.

Geopolitical conflicts often lead to increased risk aversion. Historical data shows that conflicts in the Middle East often cause short-term strength in energy stocks and pressure on high-oil-consuming industries like airlines. As traditional safe-haven assets, gold usually attracts capital during conflicts, with gold prices often rising.

However, recently, gold and silver prices surged and then quickly fell back, seeming different from before. When safe-haven trades become overly concentrated, gold’s volatility may increase. Be alert to whether gold, as a safe asset, might turn into a risky asset.

How long will this conflict last? What should ordinary people do?

Historical experience suggests that oil price increases caused by geopolitical conflicts are mostly temporary risk premiums. Only when capacity is substantially damaged or transportation routes are blocked for a long time will oil prices enter a sustained high level.

The IEA currently shows that there is still some spare capacity and inventory buffer globally. Therefore, short-term fluctuations do not equate to a long-term energy crisis.

However, recent tough statements from Iran regarding Hormuz shipping add significant uncertainty to this conflict.

What we can do is avoid panic but understand the transmission logic. Keep an eye on price adjustment windows, plan travel and fuel use reasonably, and monitor price trends. When it comes to investments, avoid emotional chasing of rising prices.

References:

• IEA Monthly Oil Market Report
• IMF “World Economic Outlook” (2025)
• National Bureau of Statistics: “Interpretation of December 2025 CPI and PPI Data”
• CCTV News: “Impact of Iran Closing the Strait of Hormuz: Expert Analysis”
• Securities Times: “Oil Price Adjustment Tonight! About 27 Yuan More per Tank of Oil”

Duty Editor: Guli