News

How Does Soaring Oil Price Affect the Construction Machinery Industry?

Release time:

2026-04-23

Author:

Source:

China Construction Machinery Business Network

Abstract

Since 2025, the global crude oil market has seen a worsening supply-demand imbalance, with international oil prices continuing to climb and domestic diesel prices rising sharply accordingly. Persistently high energy costs are squeezing profit margins in the construction machinery sector.
 

High Oil Prices May Become the New Normal

 

A high global oil price environment has taken shape and is set to persist.

 

Since October 2025, escalating geopolitical conflicts in the Middle East, combined with the Red Sea shipping crisis and transportation risks in the Strait of Hormuz, have tightened expectations for global crude oil supplies, driving a sharp rise in oil prices.

 
According to a report by Caixin on March 26, Brent crude briefly dropped to $93.45 per barrel on ceasefire expectations, but rebounded strongly as market optimism faded amid Middle East tensions. It broke through the $100 per barrel mark, surging 4.6% on the day to $101.7 per barrel, officially ushering in a high oil price era.
 
Overseas markets have been hit harder: diesel prices in California, USA, hit a record high of $7.018 per gallon. Cost burdens for businesses in energy-importing countries such as the Philippines have risen sharply alongside oil prices.
 
A March 2026 report by Goldman Sachs Global Commodities Research projected that the average Brent crude price will stay around $110 per barrel in March–April 2026, and the high oil price environment may last until the end of 2027.
 

Driven by international oil prices, domestic refined oil prices have risen sharply. From October 1, 2025, to March 24, 2026, domestic refined oil went through 13 pricing cycles, with 9 increases.

 

Taking 0# diesel as an example: the national average retail price was about ¥6.82 per liter before the conflicts (October 1, 2025) and rose to ¥8.24 per liter by March 24, 2026 — a cumulative increase of over 20%. This directly raised the baseline energy cost for the entire construction machinery industry.

 

Construction Machinery Industry Pressured to Move Forward

 

The return of high international oil prices is not a short-term fluctuation; its impact has quickly spread to end markets worldwide, hitting the construction machinery sector first and hardest.

 

As core equipment for infrastructure, mining and other fields, construction machinery relies heavily on fuel. Soaring oil prices exert comprehensive, multi-layered pressure across the industry, from end-user operations to the entire industrial chain.

 

Construction machinery is a typical energy-intensive industry. For core equipment such as excavators, loaders and cranes, fuel accounts for 40%–60% of total operating costs.

 

Every 10% rise in oil prices increases the daily operating cost of a single 20-ton excavator by more than ¥100, significantly squeezing profit margins over long-term operation.

 

Pressure is more acute in the equipment rental market. Currently, the daily rental rate for a 20-ton medium excavator is about ¥1,800. As fuel costs rise sharply as a share of total expenses, some low-price projects fall into a “lose more with more work” dilemma.

 

Small and medium-sized owners have suspended operations or sold equipment, accelerating secondhand equipment circulation and intensifying competition in the stock market.

 
Along the industrial chain, cost pressures continue to transmit, narrowing overall industry profit margins:
 
  • Rising oil prices directly increase costs; some projects are delayed due to high expenses.
  • Consumables such as hydraulic oil and lubricants are closely linked to oil prices, raising maintenance costs and further squeezing profits.
  • Demand for high-fuel-consumption models shrinks, disrupting production layouts of manufacturers and bringing short-term market volatility and adjustment pressure.
 

Crisis Brings Opportunities, Forcing Industrial Upgrading

 

Price hikes are never isolated. While pressuring downstream sectors, they also bring new momentum to the industry.

 

Although high oil prices cause short-term pain, they act as a powerful catalyst for the transformation and upgrading of the construction machinery industry.

 
Against the backdrop of the “dual carbon” goals and increasingly strict environmental regulations, electric equipment has become a “hard currency” in the market, with increasingly prominent life-cycle cost advantages.
 
Data for January–February 2026 shows:
 
  • Electric loader sales reached 5,132 units, with electrification penetration rising to 24.1%.
  • Domestic electric loader sales hit 4,717 units, with penetration as high as 51.52%.
 
Sustained high oil prices will continue to push up industry electrification rates.
 
Soaring oil prices are forcing industrial upgrading:
 
  • Hybrid and low-fuel-consumption products will be launched at an accelerated pace. On the same day oil broke $100, Sany launched the world’s first intelligent hybrid pump truck and its 2026 electric mixer truck.
  • Rental business models are upgrading: flexible models such as volume-based billing and risk-sharing are gaining popularity; bulk rental of electric equipment is emerging as a new growth driver.
  • China’s technological and industrial chain advantages in electric construction machinery are expanding. The global high oil price window helps Chinese firms gain more overseas share and cultivate new growth engines.
 

In the short term, rising oil prices bring pressure on operating costs and supply chains.

 

In the long run, they will accelerate new energy substitution, overseas market restructuring and supply chain optimization, driving the industry toward higher efficiency, greener development and greater globalization.

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