China raised fuel oil prices early today as a response to the surging crude oil costs in the global market.

From after midnight last night, the prices of gasoline, diesel and aviation kerosene will be raised by 500 yuan (US$66.67) per ton, the National Development and Reform Commission announced in a statement on its Website late yesterday.

The adjustment was made to shorten the gap between high-flying international crude prices and state-set domestic oil prices, according to the National Development and Reform Commission.

The government-controlled oil prices in domestic market had been blamed for a shortfall of oil supply, as some refineries would stop processing to avoid losses while some producers and dealers would hoard up oil to gain more profits in the case of possible price hikes, said Liu Zhenqiu, vice director of the price department of the NDRC.

Crude price in international market has reached US$93.53 per barrel on October 29, up over 80 percent from the price at the beginning of the year.

"If the crude price is US$80 per barrel, domestic refineries will lose 600 yuan for each ton of crude they process, and 1,000 yuan for each ton of oil they produce," said Liu.

To increase oil supply and keep the domestic market stable, China National Petroleum Corporation (CNPC) and China Petroleum and Chemical Corporation (Sinopec) ordered their refineries to work almost full power. CNPC pushed up its processed oil output by nearly 10 percent in the third quarter compared with the same period last year.

After importing 60,000 tons of gasoline in September and 90,000 tons of diesel oil in October, Sinopec said it planned to buy more diesel oil in November to relieve the tightened domestic demand.

CNPC also imported 200,000 tons of gasoline and diesel oil to the coastal market in the third quarter, and tuned down oil export.

Sinopec did the same and almost stopped the export of gasoline and diesel oil in the latter half.

Prices of railway tickets, natural gas for civilian use and public transportation will not be raised to reduce the impact of price hikes on people, and the government will provide subsidies to taxi drivers, said the NDRC.

However, prices of railway cargo transportation, aviation passenger services and highway transportation might rise, it said.

Liu said that increased oil price would contribute 0.05 percentage points to the monthly consumer price index (CPI), which stood at 6.2 percent in September. Though a small impact, NDRC would "try its best to control possible chain effects," Liu said.

The country will also raise the price of natural gas for automobiles and industrial production, according to the NDRC.