Low oil prices influence Russia’s economy
Falling oil prices are inflicting deeper economic pain on Russia’s economy, which is already reeling from EU and U.S. sanctions.
Russia’s economy has become more dependent on oil to meet its budget commitments. Excluding oil revenue, Russia has run a budget deficit that hit 10.3 percent in 2013, the highest level in three years.
In other words, the government needs oil revenues to plug budget holes, and that need is growing.
Russia occupies a strong economic position when oil prices are high, but for every $1 decline in the price per barrel of oil, Russia loses $2.1 billion in revenue on an annualized basis. Oil prices dipped to around $92 per barrel in early October.
Running a deficit will be tricky because western sanctions have restricted access to financial markets.
The Russian economy is far too dependent on the global price of oil, a volatile benchmark largely out of the Kremlin’s control.
Source: oilpricecom- Low oil prices influence Russia’s economy
