15 December 2014

Tanking Oil Prices have Putin's Russia
'on the Verge of Economic Ruin'

Oil arguably brought an end to the old Soviet Union and once again the price of crude is proving to be a curse for the Kremlin. The precipitous drop in oil prices recently has left Vladimir Putin’s Russia on the edge of economic ruin. 

The Kremlin has warned of a severe slowdown next year, with the economy entering a technical recession in the first quarter. 

The year started badly for Russia after the Ukraine crisis boiled over and triggered capital flight and tough economic sanctions. Now a collapse in oil prices – down 45% since June – has become primary cause of Russian pain. 

'This just looks ugly, period,' said Jonathan Anderson, of Emerging Advisors, in a recent note to clients. Jacob Nell, of Morgan Stanley, said: 'Since oil and gas account for 67% of Russia’s exports and 50% of federal budget revenues, oil prices drive the country’s economic cycle'...

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