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I am hearing that the Indian government is buying Russian oil at an all time high on discounted rate . Technically, the price of petrol diesel should go down in India . However ,I've heard that price of oil has increased in India and government will give subsidy to maintain the prices by using their forex reserve. I am curious to know how can price increase if they're buying on almost 30 percent discount rate.

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  • $\begingroup$ Price of retail petrol and diesel also includes taxes. India had hiked taxes which have been recently decreased to ease inflation. $\endgroup$
    – Dayne
    May 30, 2022 at 9:13

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Because the Russian oil is trading at a discount relative to new high price of oil. For example, if oil price increases from \$50 to \$100 per barrel and Russian oil trades at 30% discount, the discounted price is still \$70 which is 20\$ higher than old price of \$50.

At the end of May last year the price of barrel of oil was around \$66, this May the price went as high as to \$115 according to market watch. The Russian oil is selling at around \$75 (see statista), despite the discount (which is more than 30% now - see statista) it is still much higher than last year.

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