Fuel price policies in Asia
Cambodia
Cambodia operates a largely market-determined fuel pricing system, with no significant domestic production and no formal subsidy mechanism. Prices change frequently and broadly track international crude, though there are periods of stability when prices are held despite modest movements in global markets. In dollar terms, Cambodian pump prices sit in a mid-range for Southeast Asia. The informal dollarization of the economy means exchange-rate pass-through is less of a complicating factor than in many neighboring countries. The overall pattern is one of a small, import-dependent economy with market fuel pricing.
China
China's retail fuel prices are set by the National Development and Reform Commission (NDRC) on a formula linked to international crude benchmarks, reviewed roughly every ten working days. Our data show prices changing in nearly every period, consistent with the regular review rhythm. However, the formula includes floors and ceilings: prices are not reduced below a minimum when crude is very cheap, protecting refinery margins, and upward adjustments are slowed or paused when crude spikes sharply, limiting industrial cost pressures. Diesel, which is important for transport, construction, and agriculture, is managed with particular caution. The overall picture is a sophisticated managed-market model: formula-driven enough to track global markets over time, but with deliberate volatility dampening and government override capacity when policy priorities demand it.
India
India's fuel pricing history is one of phased liberalization. State-owned oil marketing companies sold below cost for decades, compensated through budget transfers. Petrol was partially deregulated from 2010 and diesel from 2014, with prices revised on a regular schedule. In practice, revisions are frequently suspended around state elections or during sharp crude price increases. The data show Indian retail prices moving far less than underlying crude oil price volatility would imply. Similar to other countries in the region, the government pays particular attention to diesel fuel. Its price had been essentially fixed since the start of the Ukraine war and barely moved during the Iran war.
Indonesia
Indonesia operates a managed-price system in which the state energy company Pertamina sets prices for subsidized fuel grades while premium grades fluctuate more freely. The data show a pattern of periodic administered adjustment: prices remain unchanged for extended periods before stepping up or down in discrete increments. When crude surged in 2021–2022, Indonesian pump prices adjusted only partially and with a lag, with the government absorbing the remainder through the budget. Similar to China, the government pays particular attention to diesel prices, as they are central to logistics, agriculture, and fishing. Indonesia has made several attempts to reduce subsidy spending over the years, but such efforts are always met with public resistance. The result is a system that partially tracks international prices but with deliberate smoothing and political override during periods of high energy costs.
Israel
Israel operates a market-based system with substantial excise duties and VAT, broadly comparable to Western European models. Retail prices adjust in the large majority of weeks and track international crude reasonably closely, though the large fixed tax component creates a price floor that limits the downside when crude oil prices decline. In dollar terms, Israeli pump prices are relatively high by Middle East standards and even more broadly. Besides oil prices, the USD value of the local currency, the shekel, plays an important role, as its value is not pegged to the US dollar and exhibits fairly large changes over time.
Japan
Japan's fuel market is primarily shaped by substantial excise duties rather than subsidies. These create a large fixed price component, meaning pump prices swing less in relative terms than crude alone would imply, both on the upside and downside. Retail prices change every week in our data series, consistent with continuous market adjustment. The main policy departure came after Russia's invasion of Ukraine, when oil prices spiked sharply and the government introduced a wholesaler subsidy to limit pass-through to consumers. That was a break from earlier policies of very limited intervention. The scheme was extended several times before being gradually unwound as international prices moderated. Then, the government intervened again when the Iran war began.
Jordan
Jordan is a net oil importer with no significant oil resources of its own, making it acutely exposed to international price movements. The government has historically regulated fuel prices through a monthly review mechanism, and the data show prices changing in the large majority of months, although with occasional multi-month freezes that suggest political discretion at moments of sharp price increases. Jordan has undertaken subsidy reform over the past decade, moving away from across-the-board fuel subsidies toward more targeted social transfers, and pump prices in dollar terms are relatively high by regional standards, reflecting a policy of cost recovery rather than suppression. The Jordanian dinar's peg to the US dollar eliminates currency risk from the import cost equation.
Kuwait
Kuwait presents the second most extreme case of price rigidity in the dataset after Saudi Arabia. Gasoline prices changed only twice in ten years. As a major oil producer with among the lowest fiscal costs of production in the world, Kuwait has maintained some of the cheapest pump prices on earth, treating domestic fuel as an implicit citizen benefit.
Laos
Laos presents an unusual pattern for a small, landlocked economy: local-currency fuel prices have risen by nearly five times over a decade, a magnitude that substantially exceeds what international crude price movements alone would explain. The primary driver is the severe depreciation of the Lao kip, which has lost a large fraction of its value as the country has grappled with a debt crisis and balance-of-payments pressures. In dollar terms, the price increase is more moderate, suggesting that the underlying fuel pricing mechanism has partially tracked global crude, but that currency collapse has dramatically amplified the local-currency cost of imported fuel. The data show frequent price changes alongside this inflationary backdrop, consistent with a system that adjusts regularly but cannot insulate consumers from macroeconomic instability.
Malaysia
Malaysia operates one of the most generous fuel subsidy systems in the region relative to the size of its economy. For many years, the government directly subsidized gasoline and diesel prices, holding prices well below market-clearing levels. When crude surged in 2021–2022, pump prices barely moved, with the subsidy bill expanding accordingly. The approach is closely tied to Malaysia's position as an oil and gas producer, with revenues from Petronas historically helping to fund the program. Fiscal pressure has nonetheless prompted reform: in recent years Malaysia has moved toward targeted subsidies, maintaining low prices for lower-income consumers while gradually exposing higher-income groups and foreign nationals to more market-aligned rates. As a result, the start of the Iran war saw one of the largest price increases in the region, particularly for diesel fuel.
Pakistan
Pakistan's fuel pricing data tell a story closely intertwined with a broader economic crisis. Local-currency gasoline prices rose about threefold over the last ten years, driven by rupee depreciation and the unwinding of fuel subsidies that the government was forced to remove under IMF program conditions. Pakistan had maintained significant fuel subsidies for much of the period, keeping pump prices below cost-recovery levels, but ongoing fiscal pressure has compelled upward corrections. The data show prices changing in the large majority of months, reflecting a system in near-constant adjustment as the government attempts to balance fiscal consolidation against the social cost of higher fuel prices.
Saudi Arabia
Saudi Arabia offers an extreme example of administered fuel pricing. Gasoline prices have been held at a single fixed level for years at a time, unchanged through the pandemic collapse in crude oil prices, the subsequent spike to multi-year highs, the gradual easing thereafter, and the Iran war. As the world's largest crude exporter with some of the lowest production costs on earth, Saudi Arabia treats cheap domestic fuel as a direct dividend of resource ownership. In dollar terms, with the riyal pegged to the dollar, Saudi pump prices are among the lowest in the world, a position maintained entirely through deliberate policy.
Singapore
Singapore sits at the opposite end of the spectrum: fully market-priced, with high excise duties and no consumer subsidies. The city-state has no domestic production and is a major refining hub, which places it structurally closer to market pricing than many oil-producing neighbors. Pump prices adjust frequently and, in dollar terms, are some of the highest in Southeast Asia, reflecting high taxes rather than supply scarcity.
South Korea
South Korea's system resembles Japan's: market-based pricing with relatively high taxes, continuous price adjustments, and price levels that are among the higher ones in dollar terms. During the 2021–2022 oil price shock, the government lowered fuel taxes and effectively reduced the pass-through of oil prices to final retail prices. Similarly, the government intervened with a price cap during the Iran war. Hence, the system is one of market-set prices except in periods of large oil price shocks. However, interventions in Japan are somewhat more heavy-handed compared to South Korea.
Sri Lanka
Sri Lanka's fuel price data are a direct record of economic crisis. Local-currency prices rose more than fourfold in ten years, driven not just by international crude movements but by the sharp depreciation of the rupee during Sri Lanka's 2022 sovereign debt crisis. Fuel shortages, rationing, and long queues at petrol stations characterized that period, as the government ran out of foreign exchange to pay for imports. The data show extended flat periods, sometimes lasting nearly two years, reflecting administered price freezes that became fiscally unsustainable, followed by sharp corrective increases.
Taiwan
Taiwan’s policy is similar to those of Japan and South Korea: flexible prices that adjust to oil price fluctuations but with decisive government intervention when oil prices increase rapidly. The extent of intervention seems closer to the level practiced in Japan than to South Korea.
Thailand
Thailand's fuel pricing sits between outright subsidy and full market pass-through, structured around a statutory Oil Fuel Fund that collects levies when prices are low and disburses support when they are high. Thai retail prices respond as expected to international crude oil prices but with some dampening. Hence, the range of pump price movement is consistently narrower than underlying crude volatility would imply. Diesel has been subject to price caps during inflationary episodes to prevent transport costs from feeding through to food prices, while gasoline pricing has been more market-determined. As a net importer, Thailand cannot fully neutralize currency effects: when the baht weakens against the dollar, import costs rise regardless of crude stability, and consumers absorb some of that pass-through.
The Philippines
The Philippines operates one of the most liberalized fuel markets in Southeast Asia. The Oil Deregulation Law, in force since the late 1990s, removed the government's authority to set pump prices directly; retail prices are instead adjusted weekly by oil companies based on international crude and local refining costs. Our data confirm a close tracking of Brent price movements, with limited buffering in either direction. The government retains limited tools such as occasional excise tax suspensions, but these are marginal interventions.
The United Arab Emirates
The UAE took a landmark step in 2015 by becoming the first Gulf state to fully deregulate retail fuel prices, linking them to a monthly formula based on international benchmarks. The data show UAE prices changing in the large majority of months, tracking global crude more closely than any other Gulf economy. The monthly pricing committee sets prices at the start of each month, and the series broadly mirrors the shape of the Brent price cycle, with the dirham's dollar peg eliminating exchange rate as a complicating factor.
Vietnam
Vietnam's fuel pricing occupies a middle ground: the government sets a price ceiling reviewed roughly every ten days based on a formula covering crude costs, transport, taxes, and distributor margins. Retail prices change in almost every period, reflecting the frequent review cycle, while the magnitude of adjustments is slightly dampened compared with completely liberalized markets. A price stabilization fund provides a cushion against sudden increases and is replenished when prices are low. State ownership of major petroleum distributors gives the government additional informal leverage, blurring the line between formula-based and administrative pricing. The result is a system that nominally tracks markets but retains substantial scope for discretionary intervention.
Regional Patterns
The subsidy-to-market spectrum. The group spans the full range from Saudi Arabia's multi-year price freezes to Singapore's and Israel's fully market-priced, heavily taxed systems. Kuwait and Saudi Arabia anchor the subsidy end; the Philippines, Japan, South Korea, Israel, and the UAE sit closer to market pricing. Indonesia, Vietnam, Thailand, India, and China occupy the middle ground. The UAE is a notable outlier among Gulf producers: an oil exporter that has nonetheless moved to flexible pricing.
Formula-based pricing as a middle path. China, Vietnam, India, and the UAE have all adopted formula-based pricing tied to international benchmarks, but with varying degrees of discretionary override. China and India in particular exercise significant latitude in practice, pausing revisions and deploying stabilization funds. The gap between the stated mechanism and actual behavior is a consistent feature of this middle ground.
Oil producers vs. importers. Oil production does not mechanically produce subsidies, but it enables them and creates political incentives to maintain them. Saudi Arabia and Kuwait have been the most persistent in using domestic fuel pricing as a resource dividend to citizens. The UAE's deregulation shows that producer status does not preclude market pricing. Major net importers generally face harder budget constraints and have pursued more cost-reflective pricing, though not without exceptions during price spikes.
Currency exposure. Dollar-pegged economies such as Saudi Arabia and the UAE are insulated from exchange-rate effects, simplifying their pricing arithmetic considerably. For others, currency depreciation often compounds crude price increases. This dynamic is most acute for Laos, Sri Lanka, Israel, and elsewhere, where exchange-rate moves can significantly embed global price spikes into the local price level.
The politics of intervention. Every government has grappled with the tension between cost-reflective pricing and political feasibility. Even nominally market-oriented systems, including Japan, South Korea, and Israel, absorbed some of the recent oil price shocks. The difference between these and the more subsidy-reliant systems is less the willingness to intervene than the scale, duration, and fiscal transparency of that intervention.
Further resources
The latest prices in Asia are available here:
- gasoline prices
- diesel prices
Analytical measures of fuel prices policies in the countries that we track:
- fuel price regulations
Forecast of diesel prices in Asia and elsewhere:
- forecast
Fuel policies in other regions:
- Fuel price polices in Africa
- Fuel price polices in Latin America
A bit dated paper from the World Bank but still valid, including for Asia:
- Political determinants of fuel prices
