Introduction: In the first half of 2026, the Middle East geopolitical situation was fraught with ups and downs. Crude oil prices were repeatedly disrupted by supply risk expectations, and cost-side fluctuations were transmitted to the C5 industry chain. Combined with increased refinery overhauls, supported by sustained supply-demand fundamentals, prices generally showed a broad consolidation pattern. As of July 31, the average price of mixed C5 in Shandong was 5,682 yuan/ton, with a price range of 4,540–7,640 yuan/ton.
I. Mixed C5 market prices fluctuated broadly in H1 2026
In the first half of 2026, the domestic mixed C5 market experienced broad fluctuations. As of July 31, the average price of mixed C5 in Shandong was 5,682 yuan/ton, with the high point appearing on March 9 at 7,640 yuan/ton and the low point appearing on April 23 at 4,540 yuan/ton. During January–February, the mixed C5 market remained stable and consolidated, with prices fluctuating within a range of 4,730–5,050 yuan/ton. This period was driven by essential demand around the Spring Festival, with mixed C5 prices moving within a narrow band. Subsequently, in early March, affected by the Middle East conflict, navigation through the Strait of Hormuz was blocked, driving up prices across the entire industry chain from crude oil to gasoline. The mixed C5 market surged sharply, reaching a three-year price high. Thereafter, due to export controls on domestic refined oil products and weak domestic demand, the terminal sector forced a one-sided decline in mixed C5 prices, which hit the year's low, with a price range of 4,540–7,640 yuan/ton. From May to June, amid fluctuations in the U.S.–Iran conflict, the mixed C5 market fluctuated broadly within a price range of 5,100–6,200 yuan/ton. Entering July, multiple refineries, including Northeast plants, Wilian Chemical, Wudi Xinyue, and Weifang Hongrun, halted operations for maintenance. Driven by favorable supply-demand fundamentals for mixed C5, coupled with summer holiday demand support in July, mixed C5 prices fluctuated at high levels within a range of 5,900–7,340 yuan/ton.
II. Geopolitical conflict-induced broad crude oil fluctuations were the primary driver of mixed C5 volatility
In the first half of 2026, international oil prices showed an overall upward trend with fluctuations. The main bullish support was the U.S.–Iran conflict lasting more than three and a half months, which led to heightened geopolitical tensions and the closure of the Strait of Hormuz. The market abruptly shifted from oversupply to severe supply shortage, with supply-demand relationships becoming seriously imbalanced from March to May. As of June 30, international oil prices (Brent futures) stood at $72.92/barrel, up 19.8% from the beginning of the year. Before the conflict began (prior to February 28), the mainstream trading range for international oil prices was $60–72/barrel. Taking the U.S.–Iran memorandum of understanding signing (June 17) as the tentative endpoint of the conflict phase, oil prices mainly traded within $90–110/barrel during the conflict. After tensions temporarily eased in mid-June, the mainstream trading range for oil prices was $72–80/barrel.
III. Gasoline export controls coupled with weak domestic demand kept terminal-side bearish pressure on mixed C5 prices
Affected by factors such as the U.S.–Iran conflict and blocked navigation through the Strait of Hormuz, domestic refinery operating rates continued to decline, which in turn drove refined oil product output steadily lower. In the first half of the year, gasoline output fell 6.9% year-on-year, diesel output fell 3.9% year-on-year, and combined gasoline and diesel output totaled 172.36 million tons, down 5.2% year-on-year. On the consumption side, accelerated substitution by new energy, LNG, and other alternatives, coupled with high retail prices in the first half of the year, drove domestic consumption to decline at an accelerated pace. Gasoline consumption in the first half fell 7.17% year-on-year, diesel consumption fell 8.44% year-on-year, and combined gasoline and diesel consumption totaled 162.9 million tons, a decline of 7.9% year-on-year. Overall, refined oil consumption declined faster than supply, leading to inventory buildup in gasoline and diesel. As of the end of June, domestic commercial inventories of gasoline and diesel had accumulated to 25.47 million tons, up 10.1% from the beginning of the year, but down 3.3% from pre-conflict levels.
IV. H2 forecast
Crude oil: The intensity of the U.S.–Iran conflict is unlikely to return to the ultra-high-pressure state seen in early March, with a higher probability of both sides engaging in a pattern of fighting while negotiating. Moreover, U.S. President Trump has repeatedly emphasized the necessity of low oil prices in recent remarks. The final results of the November U.S. midterm elections will be released, and under high inflation, persistently excessive oil prices cannot be sustained. In the long run, there remain opportunities to close the supply gap, and international oil prices in the second half of the year are unlikely to sustain the above-$100 range as seen in the first half, with expectations of a longer-term downward trend.
Demand side: After August, summer travel demand will come to an end. Although the gasoline market will see brief demand support from the Mid-Autumn Festival and National Day in September–October, travel patterns will return to normal thereafter. Additionally, after mid-to-late October, air-conditioning fuel demand will taper off, weakening support for gasoline prices. Meanwhile, domestic gasoline output is gradually recovering from low levels, and inventories are showing signs of stabilization and turning upward, which will push the domestic gasoline market into a pattern of rising first and then declining.
Mixed C5: As domestic refineries gradually resume production in August, the supply-demand tailwind for mixed C5 will no longer hold. Based on the above influencing factors, the mixed C5 market in H2 2026 is expected to be strong in the early period and weaker later, with narrowing amplitude between highs and lows.
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